Do you find that you’re pretty comfortable spending a certain amount on discretionary items? How about dinner out? Tickets to a show, concert, or sporting event? Houses? Do you find anything over this amount to be “expensive”?
I think everyone must have thresholds for certain kinds of purchases. These thresholds are based on many different factors: income, geographical region, habit, family situation, upbringing, debt load, etc…
Here’s what I tend to think is expensive:
- Any “thing” over $200 - $300
- Dinner for two that’s more than $75
- A single family home that’s more than $400k
- A car that’s more than $30k
- A ticket that’s over $100
- A movie ticket that’s over $10
I am very unlikely to consider spending more than these amounts on these things. Some of you are going to look at this list and think: Wow! That’s expensive! Others are going to look at this and think: Boy, are you cheap! But that’s my whole point — everything is relative. I may seem like a spendthrift to some or look frugal to others.
But what’s interesting is that there are a number of “things” over $300 that I would like to have. The problem with this is that something that costs, say, $2600 is completely unattainable, even though over the course of a year I will certainly spend greater than this amount on a large number of discretionary purchases. There are two obvious solutions to this dilemma: credit cards and budgeting. We should all know by now that credit cards should not be used to buy things in lieu of saving up for them.
Budgeting to buy an item like this is not an easy matter either. I only very rarely buy something that is $200 - $300 dollars, so I’m much more likely to spend in the ~$50 range. So let’s say that I put $50 per month aside for a $2600 purchase. If I start doing that this month, I’ll have saved the money for this by August of 2012. That’s A LONG TIME from now. In the mean time, I will certainly be foregoing something. Since my discretionary budget is already pretty low, it seems as though I just can’t afford something as expensive as this.
Do you have pre-conceived spending thresholds? Do you fall into predictable spending habits? How do you save for big ticket items?
Author’s note: Since I began working on this post last week, I did more research into one of the bigger ticket items that I’ve had my eye on and found that I could get a version of it for much cheaper than I had originally expected. It should be much easier to save for this purchase.