Luxury and savings or luxury goods and personal financial tips? Sounds like those things don't go together right?
For some people, cutting back completely, doing a no-spend ban or freeze is the only way they can take control of their finances. It is the cold turkey of finances. Others like to gradually cut back on spending, put money into savings and only buy mostly the necessities, but spend some money when they like.
Then there are those that like to save money, but also love luxury items.
Saving is wonderful, but what’s the point in having money if you can’t enjoy it?
What Are Luxury Items?
A luxury item is not necessary for living, but it is deemed as highly-desired within a culture or society. This can be anything from designer bags, such as Louis Vuitton, Chanel, Dior, Hermes, to fine jewelry like Tiffany & Co., Cartier and more. Designer shoes and suits are another luxury item. Watches can be a beautiful luxury good. Then of course you have luxury cars from BMW and Mercedes, to Ferrari and Bentley. Finally, there are extravagant homes, outrageous luxury vacations, yachts and private planes.
So, Luxury and Savings?
Let's be real here. If you are in the position to have your own private plane, multiple homes, take incredible luxury vacations in $10,000 per night hotels then you probably already have incredible savings. However, if you are just a person that loves luxury items and is wondering how to realistically buy them, if you should and how to save in the the process, here are some tips.
This is typically the first reason you buy luxury. Of course, with most luxury items, you are buying the brand. For some reason, you connect with the Louis Vuitton or Chanel instant recognition of luxury. Perhaps wearing a designer purse or watch, simply makes you smile. Some people like to eat Kale, or drink Kombucha, others love to have luxury goods. Perhaps you do both. Everyone is different. Everyone's taste is different. Some people love knowing that their outfit is cute and from Walmart, and cost $20. Others love the feel of a beautiful cashmere camel coat from Sentaler that cost $1695. Either way we buy based on what we like.
This is one of the major reasons that people choose luxury items. Most luxury items are so expensive because of the craftsmanship that goes into the brand. For example, an Hermes Birkin bag, one of the top luxury designer handbags takes 48 hours to make one Birkin. All Birkins are crafted by a single artisan in one of the brand's workshops. It takes each artisan 48 hours of work to create a single bag. So, the quality and craftsmanship is outstanding. The price tag reflects that, as Birkins range from $11,900 to $300,000.
Quality v. Quantity
This is one of the major reasons that people choose luxury items. You can a have a few key pieces in your collection, whether that is a beautiful Chanel handbag, Cartier or Rolex watch, or a custom designer suit and you can instantly feel confident knowing you have a quality item. A great example of this from the brand Cuyana whose mission is Fewer, Better Things. You can be conscious of what you buy knowing that buying less of a great product, rather than a lot of lesser quality products that fade or fall apart after a few washes can actually be better on your checking account.
Luxury and Investment
So, with this one of the best ways to think about luxury items are as investments. For example. According to Time, Birkin bag outpaced both the S&P 500 and the price of gold in the last 35 years— a time period chosen to reflect the date when Birkin bags were first produced in 1981. They say that the annual return on a Birkin was 14.2%, compared to the S&P average of 8.7% a year and gold’s -1.5%. So, when your husband asks why you want a designer bag, just let him know its a great investment :)
Luxury and Savings
Let's be honest here, having a savings account in and of itself is a luxury for most Americans. So, being able to build towards a savings account and buying luxury items is even better. Often in order to build savings, you need to have a goal in mind, whether that is paying off debt, paying a new car, buying a house, going on vacation, or buying a luxury handbag, they can all be great goals. Set a savings goal to buy those Christian Louboutin heels and don't dip into until you have that money saved. You also might start with the high heels in mind and realize you actually just like the financial security of having $1000 in a savings account and adjust your goal.
The best way to purchase luxury goods is of course to buy what you can afford. If a $30,000 crocodile Louis Vuitton is out of your budget, a $500 wallet from the Maison that you have forever, can be a great start.
No matter what, money is meant to be saved and enjoyed. So, if that is through a $3000 savings account you don't dip into or a Christian Dior handbag, either way you can own your life, by owning your finances.