Splurging money on extravagant items is often deemed irresponsible or downright foolish, but we’ve got some tips for you to help ease the guilt.
We live in a time where financial advice is centred on the concept of saving cash, but some savers have forgotten to think of money as a tool they can occasionally use to spoil themselves.
Big spends tend to be more well-researched and considered than the $1500 a Melburnian so casually spends on a daily flat-white every year.
What it comes down to is spending mindfully rather than mindlessly.
Here’s my tips on how to splurge sensibly.
Make your purchase an investment: When looking to make a big splurge on first class flights, a $6k mountain bike or a Michelin Star dining experience, consider whether it’s an investment or not.
Always consider cost-per-use when buying expensive products. If you love designer handbags or watches, pick a style you’ll use almost daily rather than once a year. The same applies for clothing.
Upfront costs can be high when you buy expensive clothes in high quality fabrics, but they are more likely to stand the test of time and bring down pennies per wear.
For a food aficionado, dining at Noma in Copenhagen may be their dream, and the bill at the end of the evening may be considered as an investment in the lifelong memory of an ostentatious fine dining experience.
In simple terms, make sure the purchase will hold real long-term value for you and not simply provide a 24-hour post-purchase buzz.
Research before you buy: You should weigh up the best time to buy and the best means to make your big splurge.
Consider long-term financial goals and ensure that your spend won’t negatively impact on achieving them.
You may have dreamed of owning a Burberry trench coat since you were a teenager, but you should ensure the timing is right. Ensure you have paid off your existing car loan before you decide to make that investment.
Consider whether you might be able to pick up that trench on sale as well, such as through a northern hemisphere end-of-season clearance.
In fact, it might just be cheaper to buy your extravagance from an overseas online retailer and ship it, rather than pay a marked-up local price.
The following video has been provided by SugarMamma.TV for some extra shopping tips.
Do your research about the smartest way to fund your extravagant purchase too. Paying cash upfront will often be the smartest financial move.
But if that is not an option, don’t reflexively use your credit card to pay for your splurge of choice.
Consider taking out a personal loan from an alternative lender who may offer more competitive rates and lower fees than a bank or credit union.
Do something good to balance it out: For the financially-minded, a good way to justify a big purchase may be to do something positive to balance it out.
Start putting an extra $10 a month toward your emergency fund or start bringing food to work and use your accumulated lunch money to pay off a debt you have hanging over your head.
Splurging doesn’t have to be an anxiety inducing, stressful mess that breaks the bank. The key is to be savvy about it and avoid making extravagant spends too much of a regular habit.
We don’t tend to deliberate over everyday purchases, yet they are often the ones that put the biggest dent in our budget and can do the most long-term financial damage.
In many respects, buying expensive items in a well-considered manner is a sign of high level financial literacy.
It comes much more naturally to seriously deliberate over an expensive purchase rather than a cheap one.
And of course, a purchase that is both fiscally responsible and extravagant will leave you feeling good, not guilty.
