In a world where consumer-culture social media influencers flaunt receipts that unfurl like ancient scrolls, thrifty shoppers tend to associate expensive with wasteful. They’re usually right — but the price tag doesn’t always determine the wisdom of the purchase.
“There is a big difference between paying a lot of money for status-worthy items versus paying a lot of money for a quality item,” said Ben Richardson, financial expert, capital markets consultant and director of Acuity Training. “When it comes to material objects, luxury does not equate to quality all of the time, and the difference between the two needs to be understood explicitly in order to make a sound judgment when you consider spending money on an expensive item.”
In short, spending more when cheaper alternatives are available does not always indicate a guilt-worthy splurge. In fact, it sometimes makes financial sense.
4 Ways That Expensive Can Be Economical
Sylvia Glynn is a data scientist who crunches numbers for a living. The founder of career and resume site Ultmeche, she accepts that an expensive thing might also be economical if it fits into one or more of the following four categories.
The ‘buy it once’ philosophy says it’s sometimes wise to purchase things marketed to buyers who are more affluent than you. Even though the item might technically be beyond your means, it’s not a misguided splurge if it costs less than two of a cheaper version that’s likely to break and need replacing.
“High-quality items often have a longer lifespan,” said Glynn. “For instance, a well-made appliance can outlast a cheaper counterpart by years, saving replacement costs.”
Kendall Meade, a certified financial planner at SoFi, has proof that playing it cheap can cost you more in the long run.
“I have two dogs, and one sheds — a lot,” she said. “We were buying less expensive vacuum cleaners that cost $100-$120 at Walmart but were going through at least two vacuums per year. They would burn out because of the dog hair clogging them up one or two times per day. We finally bit the bullet and bought a Dyson, which cost us about $400 on sale.”
When you pay more for something, you’re often buying peace of mind in the form of valuable guarantees.
“Premium items usually come with warranties or better customer service, reducing repair expenses,” said Glynn.
Here again, Meade’s dog hair-challenged vacuum illustrates the point.
“We have had the vacuum for a year now and it just burnt out,” she said. “But Dysons come with a two-year warranty, so they replaced it for us. If the replacement lasts us another year, then we break even. If it lasts two years, it saves us money.”
Other pricey purchases reveal their value more subtly or slowly over time.
“A good pair of shoes or a suit might have a higher upfront cost but can leave lasting impressions in interviews or critical meetings, potentially helping career advancement,” said Glynn.
Sam Dallow, accounting, finance and tax expert at Counting King, a business funding and tax firm, also uses clothing as an example. But his value proposition has less to do with impressing a hiring manager and more to do with pure economics.
“If you have fewer clothes, but you spend more on good quality items, then your cost per wear will be lower and you will actually have saved money,” he said. Dallow also used the example of energy-efficient appliances that cost more upfront but pay long-term dividends in the form of lower utility bills.
The fourth and final time that expensive can be economical is when you plan to eventually recoup some of the cost one day by selling whatever it is you’re currently thinking of buying.
“Quality products maintain better resale value,” she said. “Think about electronics or cars — renowned brands or quality items fetch better returns.”
Don’t Mistake Cost for Quality, and Be Real About Why You’re Buying
As you can see, springing for a pricier alternative isn’t just for the wealthy. In fact, something with a higher upfront cost can actually wind up saving you money — but not always.
“Keep in mind that buying more expensive items is not always better,” said Meade. “For example, I always buy generic groceries unless a brand name is on sale cheaper. The taste is usually comparable and the brand-name food doesn’t last you any longer.”
The decision isn’t always as clear as picking the store generic over the identical but pricier name brand. The key is to ask yourself why you’re making the purchase, how often you’ll use it and to what end. If you’re keeping up with the Joneses, riding a trend or trying to buy social status, you’re probably wasting your money.
Whatever you do, make sure to weigh the four “expensive but economical” criteria against your realistic intended use.
“For example, if you want to go camping once a summer during good weather, you can get by with a cheap tent,” said Joel Ohman, a certified financial planner and CEO of Clearsurance. “But if you plan to camp frequently, regardless of the weather, you’re going to need a high-quality tent, and it’s going to cost several times more than the cheap one.”
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