Step By Step Plan: Make Sure You Made A Smart Decision To Get That ‘Luxury’ Item – Is That Investment Worth The Cost?
Written byYannie Woon
Updated on: January 18, 2023
Please note that the content of this article is based solely on the opinions of the author. It has not been reviewed, commissioned, or otherwise endorsed by any of our network partners.
I’ve noticed a common New Year resolution: giving up Starbucks. It’s like there’s this virtue in giving up more expensive things that bring you a bit of pleasure.
Sure enough, you shouldn’t buy Louis Vuitton monthly if you’re barely paying your rent.
But you shouldn’t postpone buying a zero-gravity massage chair if you have chronic back pain.
Where do you draw the line between a luxury good that’s worth it and one that’s not?
Let’s explore this together.
🌟 Key Takeaways 🌟
📌 Don’t avoid essential purchases just because they are luxury.
📌 Luxury purchases can be a good investment, depending on the item.
📌 Ensure that what you’re buying will give you something of quality in return..
📌 Do your research before making a purchase.
📌 Stick to the 50/30/20 rule when budgeting for luxuries so as not to put yourself in financial ruin.
📌 Have fun and make the best decisions for yourself!
Table of Contents
1. You Need It
Luxury purchases are expensive. And sometimes, paying the higher price is “useless.”*
*We’ll come back to this concept of “useless” in the section below.
This happens if you’re just buying the brand name. If a no-name company meets the same purpose, it’s smarter not to overspend.
In some cases, you do need it.
I need Lasik eye surgery because I can’t wear glasses. I have small kids to tumble around on the floor with. I also go to the gym four times per week, and doing burpees with glasses isn’t fun.
In your case, a $10,000 Louis Vuitton bag may be essential if it helps you land a better job.
What if you don’t need this thing but still want it? Move to step two.
2. It’s a Good Investment
Some luxury purchases may be useless according to the bias we all have in Singapore about what’s truly necessary. However, they may be good investments.
A Rolex watch may be seen as a bling accessory. But it also holds its value over time, and that can be quite significant after, say, 10 years.
It all depends on what you’re buying.
Let’s look at the example of massage chairs again. This purchase is expensive, but it may save you in medical bills down the road. Look at the math:
- $8,000 massage chair with 2-year loan and 12% interest rate gets you a $300 monthly installment.
- The average cost of hiring a physiotherapist for back pain treatment is $180.
- Disc replacement surgery prices start at $30,000. Surgery for spinal stenosis starts at $18,000.
So one $8,000 purchase now can save you thousands later. Not to mention the physical pain you won’t experience.
What if you’re not buying something because of the investment potential? If that’s you, go to step three.
3. It Gives You Something Quality in Return
That wedding dress gives you a once-in-a-lifetime experience. Expensive clothes can land you a better job.
Or, you may be working a remote job from home, like me. Then, you’re at home with your kids.
A day at the spa followed by a posh dinner every week may seem excessive.
Conversely, this can be the outlet you need to increase productivity. And to stay sane when reading the same book a hundred times in a row to your toddler.
Some purchases, however, don’t give you a quality experience that’s worth it. Those stilettos you buy each month may not get you your dream job.
Move to step four:
4. It’s Not An Impulse Purchase
Not all luxuries are created equal.
Don’t buy an Apple just for that logo. Take your time to research the item. Look at different stores and compare prices. Samsung, Xiaomi, and Microsoft are all top-notch too. Maybe even topper notch.
Here’s a trick that works for me:
I add the items I want to my cart to minimise impulse purchases when shopping online.
Then, I close the tab and, take a breather, grab a cup of coffee.
The next day, I check how I feel. If I’m still thinking about those items I’ve added to the cart, I’ll finalise the purchase.
Sometimes, though, those impulse purchases are too hard to resist.
You see a discount or think you’ve weighed things through correctly. That’s the instinct car salespeople tap into.
Move to step five:
5. It Doesn’t Put You In Financial Ruin
Budgeting is essential. But buying luxuries can be part of it too.
A great way to do this is by using the 50/30/20 rule.
50% of your income should go to essential needs such as rent, food, and bills. 30% goes to fun stuff like eating out and movies. And 20% goes to savings.
The point is not to dip into that 50% for essential purchases. Ideally, you wouldn’t touch your savings either.
But the remaining 30% of your income is fair game each month.
So, by all means, get that Starbucks triple latte. Get those shiny new shoes. Pamper yourself at the spa.
So, When Is It Okay To Make That Luxury Purchase?
Luxury purchases are okay as long as you consider a few things first. And it all comes down to this:
Do your research, ensure it’s within budget, and don’t be an impulse buyer (too often). Always remember there are better uses for money in some cases.
In others, it’s entirely necessary to get that expensive item.
Now that you know how to smartly buy luxury things, you can make the best decisions for yourself. Enjoy!
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