I was surfing the web and I saw a really cool side table. I looked at the price and immediately thought to myself “no way I’m buying a $400 dollar side table.”
Which got me thinking …
When are expensive items justifiable outside of having a high salary?
I make about an average $50k a year. I have a ton of student loans (although in forbearance currently), and a decent size car loan which I made before I attempted to become financially fluent. I have a good surplus of savings currently and some bills – but luckily not rent. Paid off my collections and pay my credit card fully every month.
Typically we are thought to “save” for items. But how does that balance with saving for the future? Where does the line between “getting what you want”, intentionally saving up for specific items, and actual financial class intersect? I probably can spend that 400 and (hopefully) never really be searching for it. And I do love the side table, as well as home decor especially as I prepare to find my own place – but … *it’s still a side table*.
I know I’m probably just overthinking and answer is probably “when it’s worth it”, but I’m just curious on others processes for decision making.
At what point does buying an “expensive” item become financially justified — and does it ever just not make sense at certain income levels?
byu/Significant-Sport428 inpersonalfinance
Posted by Significant-Sport428
11 Comments
When you budget for it. If your budget includes $X per month for discretionary spending after all your other budget lines have been accounted, once that pool of discretionary reaches $400, you can buy whatever it is you want without “feeling guilty”.
Is the more expensive one more expensive because it’s design doesn’t lend itself to mass production? If so, then for that type of item, only you can really decide how much more that is worth than the most similar variant than can be mass produced more cheaply.
Is it more expensive because of the brand? If so, then only you can decide how much the label is worth to you.
Is it more expensive because it is better quality? Now we’re getting into it. A $400 table that can be refinished as needed for the next 100 years, passed down to your kids and their kids, very well might be a good “investment” next to a similar looking $150 IKEA table that’ll be firewood in 10-15 years.
But then a side consideration on that– will you still like it in 10-15 years? Maybe the design will look dated and you’ll be shopping for a replacement anyways. I suppose if it was a quality piece of furniture, you probably could resell it to help fund the next one.
When my arbitrary mental model for calculating cost/benefit comes out positive.
Spoiler alert: it usually doesn’t when there’s a perfectly satisfactory cheaper version of an expensive item.
I would first plan for the future. Idk your specific situation but say you decide for 10% of your paycheck for future. Not sure if that is the right number for you. Then after you figure out your basic requirements. Say 30 % goes to loan repayments, 40 % goes out to stay healthy and alive. The 20 % that remains is completely up to you. If you want to buy a small treat every week go for it. If you want to save for 3 months and buy a console or something else thats your prerogative.
There really isn’t a specific line that you cross. A $50,000 a year in income is going to allow you a completely different quality of life depending on where you live. I’m in California, so even though I make a little bit over 100,000, I’m technically considered low income with my family size. But 100,000 in West Virginia is going to go a significant way further. It’s a lot more important to budget your money and decide how much you want to invest for retirement and save and pay down debt. And what’s left over needs to be assigned to luxuries like this tablet you’re looking at. If you have a discretionary fund that you can put $200 a month into, then you’d only have to wait 2 months before you could reasonably justify the purchase.
As an example, I wanted to buy a new graphics card for my computer, and it retailed for about $900. So I decided to take $100 every month plus any cash tips that I got and use that for the purchase, and that way I didn’t have to touch my usual paycheck. I think it took me slightly over 3 months to save everything.
Check out the flowchart in the sidebar.
Once debts are paid (student loans, car loan, any credit cards or medical debt) you should have some excess cash flow – you can put that toward some small splurges like nice furniture. Until then, it’s best to live quite simply so that you can quickly knock down the debts and move to the next node.
Also, your off handed comment about student loan forbearance worried me. Just because the payments aren’t due doesn’t mean they aren’t continuing to grow from interest. If you absolutely can’t pay them then you can’t pay them, but if you’re even considering a $400 table it’s best to just keep dumping excess $ into the debt.
I think expensive items are justifiable when its something you can afford to save up for and will have a tangible impact on your quality of life. theres a difference between “that is a cool thing i just saw” and “this is something that will materially be BETTER for me to have than if I got it cheap.”
“getting what you want” imo is pretty meaningless. you probably WANT 100 things a day. that doesnt mean it makes sense to have them all.
I have a place where I set money aside for
more frivolous aesthetic purchase like makeup, purses, home goods… as far as saving for the future a much smaller % of my monthly income goes there than other
places
When the quality is so good that you can see yourself using it for decades or longer.
I bought a Thuma bedframe years ago. I think it was around $1200 back then. Sure I could have bought a $500 Ikea frame, but I would have hated it and it would have gotten weaker with every move (taking it apart and putting it back together). I can see myself keeping this Thuma for decades to come. It’s already been through 3 moves.
For me, it was once I cleaned out the mess (eliminated loans I took out before gaining financial literacy), had a 6 month emergency fund, and hit my monthly retirement savings goals. Turns out when you don’t have payments going everywhere, your paycheck goes a lot further. Which means more money to spend on stuff. There are still times I say “that’s too much”. But it’s not necessarily because I can’t save up for it, it’s just because I don’t want to save up for it.
It’s less about income level and more about financial stability, priorities, and opportunity cost. An item is worth it if it doesn’t compromise your long-term goals or create stress…
when it’s within budget and when the time and effort cost of finding a better deal actually costs more than the money. if you’re a clock puncher then when you’re young it’s not worth it but maybe when you’re older and retired it is. it can be if you’re a business owner and your time is actually better allocated to figuring out what your employees are doing than trying to save 350 dollars on a coffee table.