Prioritizing expenses

Everything is expensive. But, it is really interesting how we prioritize our expenses.

For example, I am ridiculously proud of the fact that I have changed from a 'Grande mocha, skim milk, whipped cream' on a shameful twice a day basis ($3.55 a pop) to 'Grande cafe au lait, skim milk and honey' ($2.20 a pop) on a twice a week basis.

Despite my willingness to dole out the cash for coffee, I will not buy new shoes unless absolutely necessary, and I am still carting around the same tattered $14 bag from Borders.

Similarly, I have watched people pay 6 or 7 dollars a drink (times 3... 4... 5... 9?) at the club and not be willing to split a cab at 5 dollars a person. Or, spend $150 to $200 dollars on textbooks, but then skip every class.

What are priorities based on when it comes to your wallet? I heard someone say once that the way we spend our money shows where our hearts are at-- Do you think this is true? How do you prioritize your expenses? How do you determine what is important to you? Is it based on risk, habit, necessity? Discuss!