Let me ask you a question: how much should I budget on clothes this year? As a luxury broker in NYC, what is the appropriate amount to spend on work wear? I’m serious. I can’t tell. My personal style is more laidback, but that won’t fly in this business. When you’re selling high-end homes, you have to look high-end too. It’s tempting to pay what it takes to look fabulous.
Last year I went overboard on my wardrobe…. um… investment, with little to no calculation as to what long-term benefit it might serve, much less how many times I would wear that dress or that pair of shoes. I just knew people would be looking. And judging.
So I’ve been reflecting on the often blurred line between spending and investing. What’s a wise use of my money and time? How can I purchase items that will literally serve me and my business without being frivolous and going overboard on budget?
This year I’m doing better. I’m still grappling with how to tell the difference between blatant spending and strategic investment. Of time and money. Here’s what I’ve come up with so far.
It’s not what you do, it’s how you do it
This is a concept I’ve borrowed from Marie Kondo, the woman who told us to thank our things before we let them go off to the donation pile. Though Ms. Kondo’s methodology is centered on getting rid of things, we can use some of her same principles when acquiring new things. Sometimes discerning the difference between a spend and an investment is a matter of looking ahead to the future and asking yourself these questions: Will I still want this next year? Is this thing well-made and high-quality so I won’t have to replace it anytime soon? Does it bring me joy?
Basically, whatever you’re doing, it should be done from the right place. The so-called right place is whatever easily and naturally aligns with your goal for making the purchase in the first place. In my case it’s buying clothes that send a visual message of success, while not breaking the bank.
It’s a good investment of your time (see what I did there?) to give some consideration to your intention for whatever you’re buying. Taking a moment to weigh the value of what you put in versus what you’re going to get out of something can help you make sure it tips toward the investment side of things. It serves as a barometer of whether you’re doing something out of some subconscious impulse (like, I never had this kind of money before, so therefore I must spend it and I don’t care what I spend it on!) or if there will be lasting rewards, either in time, money, happiness, or all of the above.
Pretend you have less
Here’s a great concept from Mike Michalowicz’s book Profit First: The toothpaste tube analogy. The gist of it is that when we get a brand new tube of toothpaste, we don’t think about the fact that eventually it will run out and we will have to buy another tube of toothpaste. So we liberally spread the stuff on our toothbrush, half of it falls down the drain, but who cares, we’ve got plenty of it.
Then one day we start to notice that the supply is running low and suddenly we become very prudent in our toothpaste rationing. You can apply this same dynamic to just about anything involving money. When we have more of it than we’re used to we feel more carefree, but we’re not as judicious about how we spend it as we are when the funds start to get low. We are far more creative about how to make it last when we can see it won’t last forever. So regardless of how much money is in the bank account, I always ask myself, if I had less money would I still make this purchase? Do I really need this? How can I get what I want with less money?
Beware the lifestyle creep
According to Investopedia, Lifestyle creep occurs when an individual’s standard of living improves as their discretionary income rises and former luxuries become new necessities. Danger.
Here are some ways to mitigate lifestyle creep:
- Make sure you have an emergency fund for your business so you’re not standing in $500 shoes, laying off employees.
- Set up percentages for what you spend on your business. It’s easy to say, “It’s a business expense!” and go wild.
- Consider the opportunity costs. Taking a taxi so you can make calls rather than the subway where you can’t might actually save you money.
- Don’t discount the intangibles. Your self-respect and confidence deserve investment, even if you don’t see the return in your account.
- Wait at least 24 hours to make the decision to make sure you’re not making it in a hot state.
- If you’re unsure about an investment, ask a mentor.
Back to my new wardrobe
At the end of the day, time is money. I don’t want to spend too much more time deliberating on my next steps with regards to my new wardrobe. I know what not to do. If I buy frivolously I’m only spending. But if I buy with intention, I’m making an investment in my career and my future self. I intend to be successful and I intend not to spend more than is necessary to accomplish that goal. Purchasing fewer, higher quality items that will last longer saves me both time and energy. Less time and energy spent on thinking about getting dressed means I have more time for things that will really boost my success, like meditation and family.
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