I remember when a client came to me expressing that her husband was addicted to buying luxury watches.
The most random thing ever, right?
But this seemingly “random” interest was racking up the couple $4,000 a month.
Don’t get me wrong, I would never tell a client not to splurge on what they love, but after getting to the root cause of his spending, it was deeper than just “passion for fashion.”
It was to feel like his hard work actually paid off. Each new watch gave him a sense of accomplishment (if you will). If you’ve ever wondered why some people end up addicted to buying designer/luxury items…this is a common reason.
It’s also an easy fix, when you pivot the source of the accomplishment = it can be a healthy behavior. We created a plan, replaced the watches with goals and with a couple more modifications..my clients were able to get rid of over $54,000 dollars of debt.
While high-end watches can be marketed as investments, the truth is they rarely offer the returns people expect. Deloitte’s 2023 report shows the luxury watch market is unpredictable, with appreciation far from guaranteed.
Instead of spending on luxury, they could’ve invested in a diversified portfolio, building true long-term wealth.1
The 3 brands to skip:
- High-End Watches
Luxury timepieces are often seen as status symbols, but they aren’t always the financial win they’re cracked up to be. Instead, putting that $10,000 into a well-diversified investment portfolio will likely yield a far better return in the long run. - Luxury Vehicles
I can’t tell you how many people come to my office with luxury car payments and a net worth that’s less than $50K. Owning a $600/month car when you don’t even have an emergency fund doesn’t scream wealth—it screams financial burden. High-end cars depreciate rapidly, so unless you’ve got at least six months’ expenses saved, skip the luxury car and build your wealth first. - Over-Traveling
We all have that friend who’s constantly posting glamorous vacation photos, but what they don’t show you is the credit card debt piling up behind the scenes. While travel is an amazing experience, it can also be a financial drain if done excessively. Reallocate some of that travel budget to building your emergency fund or investing in appreciating assets, and plan for trips when you’re in a stronger financial position.
What to get from this:
Before you splurge on any luxury items, ensure you’ve built a strong financial foundation. A savings benchmark of $50K is a great starting point. Focus on emergency funds, retirement contributions, and smart investments, so that one day, you can enjoy those luxuries guilt-free.
After all, true wealth is about making choices that support long-term financial freedom—not just looking the part.
- There is no guarantee that a diversified portfolio will enhance overall returns or outperform a non-diversified portfolio. Diversification does not protect against market risk. (26-LPL) ↩︎
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