Story by Stephanie Mickelson
March 2024
A ccording to Rachel Cruze, the answer to the burning question: “When should you buy luxury goods?” is simple: When you can afford it .
On Bobbi Rebell’s podcast Financial Grownup, Cruze shares the story of seeing her mom with a very fancy, very expensive purse. When she looked up the purse and saw the price tag, she says she “almost passed out.” After seeing how much it cost, she says “I had kind of this pity party for about five minutes there, at my laptop, thinking ‘but we work so hard.'”
Then she reminded herself that she and her husband were just starting out on their financial journey. They had entry-level jobs with entry-level pay, and her parents had been working towards their financial goals for 30 years. So, she decided to forego the purse until she could actually afford it rather than putting her financial situation in peril.
Sometimes, when young people go out on their own and begin their working lives, they immediately want the lifestyle that their parents have. But it’s easy to forget that their parents likely started where they are now, making an entry-level wage and making hard choices about what they could afford and what they couldn’t.
According to the Bureau of Labor Statistics fourth quarter 2023 data, wage and salary workers starting their careers, between 20 and 24 years old, make just under $40,000 per year. As they continue to work and see career gains and promotions, that number jumps to just over $67,000 annually by the time they are between 35 and 44 and have spent over 10 years in the workforce honing their skills and gaining experience.
So the lesson is: Wait to buy the things you want until you can actually afford it .
You can also work towards saving for the thing you want by doing saving challenges, like the 100 Envelope Challenge which can help you save $5,000 in just three months, as reported by GOBankingRates.
Waiting until you can afford something or saving up the money for something you want may mean making hard choices while your income is lower, but as Cruze puts it, you’re “saying no in the present so that [you] can say yes in the future.”
