In life, there are times to splurge and times to save, but how do you know when it makes the most fiscal sense to spend or to save? The answer is simple yet maddening: it’s completely up to you and your budget.
A quick way to figure out what is worthy of splurging is to determine what is most important to you, and where your budget can stretch to meet your needs. Of course, bills, utilities, rent/mortgage, all are necessities that come with day-to-day living. It is advised to have a mortgage that leaves room for error, meaning that if your income were to change, such as with a lay off or a salary cut, you can comfortably pay your mortgage and still enjoy the necessities of life. After all the not-so-sexy bills are paid and you hopefully put money away in savings, you’re left with the gift of disposable income that can go toward your favorite luxuries in life, without needing to take on several side jobs to afford your lifestyle.
Determine What Are Non-Negotiables in Your Life
I will give you a peak into my life to show how I differentiate between what I splurge on, and what I skimp on to give myself the best life I can afford.
I am incredibly passionate about fashion and expressing myself through personal style. I don’t believe in only buying designer labels to look the part, but I do believe in investing in quality pieces that are made from high-quality fabrics. This, to me, means that my items will last longer and make me happiest. Of course, with high quality clothes sometimes comes with a hefty price tag. Now I definitely utilize sites like Poshmark, eBay, or local vintage shops for trendier items that won’t be worn as often as say a black wool coat that could cost upwards to $1,000. How do I justify a jacket that costs that much? I use my $1 a Day Theory.
Tip #1: $1-A-Day Theory
When it comes to high price luxury items, it can get expensive very fast. Since I do not have the luxury nor desire to dress head-to-toe in designer clothes, it requires some finesse to determine what is worth the investment, and what does not. I detmine this by seeing the retail price of an item, and seeing if I would wear an item the amount the price costs.
For example, if I want to invest in a designer handbag, those start at $1,000. Big price tag for most of us, yes, but there’s a way to digest that sticker shock easier. Would I wear the bag 1,000 times and beyond? Would it last nearly 5 years of seasonal weather? What is the re-sale value? Thost questions help me navigate what is worth the splurge, and what isn’t. A designer handbag, in my opinion, could last you easily 5+ years of constant wear, when taken care of properly. Designer items also come with the resale discount, which means that when you are “done” with an item, you can resell it, and that too cuts down the cost of the item overall. That $1,000 bag can turn into a $500 bag that you can wear everyday for 5 years. For a personal like myself who loves investing in special luxury items and familiar with the ins and outs of reselling, it is a sound investment in what makes me and my wallet happy. This concept of $1 a day can be applied to just about any big investment you want to make and can help you determine if something is truly worth the value of the retail sticker.
However, there are places where I scrimp on to assure I am fiscally responsible with these splurges. For example, I live in New York City, and car services are, more often than not, less convenient than the ever-terrible MTA subway. Funny enough, the subway or walking can get you somewhere in the city faster than driving because of the traffic. I don’t see the value in car services because I would rather walk (free workout and free ride!) or take the subway at $2.75 a ride. A cancelled Uber ride costs $5, so looking at the grand scheme of things shows you that it simply isn’t a sound investment to throw your money into transportation in a city like New York. However, this can be completely different for people living in different areas of the world. Some people in New York wouldn’t be caught dead on the subway and gladly spend on Ubers. It really is up to what is important to you, and to me, I’d rather walk the walk than spend the money to roll 1 mph in Midtown.
With this mindset, it’s clear what I am willing and not willing to spend my disposable income on in a given week. I am able to budget accordingly, and I can sensibly cut back on novelties that aren’t as important to me. No one is asking you to cut out one thing completely to afford another, but it is prudent to determine where you can be frugal so you can be less frugal when you want to splurge, and not throw you off your monthly budget.
Let’s unpack some strategies that can help you determine what is most important in your life, and what can possibly take a budget cut. These cuts are ultimately gains, as you will save more money, and have more money to spend on the items that matter to you.
Tip #2 – Be Careful of Social Media Marketing
Social media marketing is a great tool to boost your company engagement, or even simply keeping in touch with friends near and far. As with all good things, there are cons as well. Social Media also has a hold on influencing users to feel insecure or anxious, since it shows you exactly what you are missing out on while you were at home. This also parlays into influencer marketing, a type of marketing that influences you to think you need something you wouldn’t ordinarily think you need. For example, Instagram Marketing can tell from your social media usage what kind of products to market to you, regardless of your budget. If you like a couple of pictures of models with a perfect ‘do, all of a sudden you can start seeing a $50 bottle of conditioner being sponsored on your feed. It easily goes from an outrageous expenditure to a normal amount of hair care if you don’t notice the influence of seeing expensive conditioners becoming the norm on your social media timeline.
What’s the solution? Well, the easiest way is to avoid Social Media in general, but that is not realistic in today’s world. A much less severe way is to unfollow brands or companies that have more “aspirational” products that are out of your price range, or simply hide sponsored content that does not align with your budget. Stick to following friends and people you know, rather than your favorite companies. Celebrities also are risky to follow on social media as they are often paid to promote things that they a) don’t even use and b) that can make you want to go out and buy, buy, buy. With a simple settings change, you can continue stalking your ex from high school in peace without worrying about going over budget. Just make sure you don’t click “like” on that picture from 2013 while you’re snooping on pictures!
Tip #3 – Revamp Your Budget to Reflect What You Want to Spend Money On
One great way to discern exactly what things matter to you and what things don’t is to buy everything brand-free or do-it-yourself. Act as if you have no budget for any of your more expensive treats, and see what you actually miss, and what you don’t miss. The next time you go to the store, buy everything store brand. We are talking store brand soap, store brand sandwich bags, store brand mustard, store brand e-v-e-r-y-t-h-i-n-g. You’ll be amazed at how low your bill is when you aren’t spending extra dough on marketing and brands. Another great resource is www.brandless.com, which is an excellent store that sells everything from groceries, to dish soap, to home goods, all for a brand-free name price! All orders over $48 are free shipping, and you can subscribe to products you use often. This is a great place to start when whittling down what matters most to you, and what can just be a brandless item.
More often than not, you will realize that the items that you spent extra money on was never very necessary, and you can find new places to cut costs. Some items will maybe require a boost into the “middle-of-the-road” items, and then, of course, you will have your items that you desperately need to upgrade. This leads us to my last tip.
Tip #4– Whatever Brandless Items are Stealing Your Joy, Evaluate Why You Want/Need the Pricier Item
I struggle with overspending on items from time to time, so I have since tried to adapted a mindset of go for the brandless item first, then ask questions later. This helps me avoid spending what I think in that moment I should spend, and sit with the brandless item and become acquainted with it. Do I really mind my soap is brandless and not dove with lotion? Maybe? Or maybe I’m just being snobbish, and not evaluating the product at face value. Sometimes I can be a brand snob, and it has hurt my wallet, so do your best to avoid those pesky labels!
Luckily for those who have the same label obsession I do, 99% of the time, when I say “no” to an expense, I forget why I spent so much on it in the past. When that happens, it is clearly not important to me. However, there are those times when I do get bothered by it, because it maybe got in the way of me enjoying a hobby to its fullest, or maybe I don’t go to the same coffee shop my friends go to because I want to save a couple dollars. It isn’t worth sacrificing priceless items like relationships just to save some dough. However, if your relationships are running you red on a regular basis, it may be time to evaluate the foundation of that relationship, as well. True friends and partners should be able to stick by you whether you’re flush with cash or bankrupt.
More importantly, I figure out something that’s actionable, a real principle I can follow going forward. I figure out that I deeply care about something and it’s okay to spend a little more in that area, or I realize that some expense is actually deeply tied to an area I care about.
This practice helps you not only determine what is important in your life in general, but also where you can funnel your money and still feel complete spiritually. It helps you notice patterns that could possibly use adjusting, like weekly brunches with the girls can possibly change into a once a month event, with weekly potlucks in between. You’re still eating delicious food with your friends, but just in a different venue and for a fraction of the price (and waiting time!). It’s a little tweak that can add a whole new dimension to your life, wallet, and friendships. Why not give it a try and see for yourself?
These tips are just some guidelines to help navigate the murky waters of budgeting and realistically evaluating what drives your purchases. Are you looking to find more ways to save money and cut costs? Set up a free personal 30-minute consultation today by clicking on the big green button below and working with Lassise Financial Coaching. Together we will find the best way to save you money and live your best life, without settling in every aspect of your life.