How Much Shopping Is Too Much?

by Stacy Francis, CFP®, CDFA

Flipping through the latest In Style last night, I realized how easy it is to feel that the price tags for the things magazine editors like to tell us we absolutely must have are out of line with our earnings. The consensus among those in the know seems to be that burning more than 10% of your after-tax income on luxuries is insane. But the number may be lower – or higher – for you, depending on your circumstances.

The first things you need to consider are your financial priorities. Are you anxious to achieve financial independence and leave your job as soon as you can? If so, chances are, 10% is too much for you. If, on the other hand, you are the material girl Madonna once sang about, perhaps having a to-die-for closet and that home everyone adores means more to you than an early retirement. Perhaps you even love what you do and can’t wait to get to work in the mornings. If this sounds like you, you can probably afford to splurge a little extra.

The second factor you need to consider is your income versus spending ratio. Are you able to stick to a retirement savings plan, stashing away enough cash to feel good about your senior years? Or are you constantly struggling to make ends meet? In debt, even? This will impact your ultimate shopping budget, too.

Finally, you need to give some thought to those who depend on you. If you are single and make a nice living, you can probably afford to spend a decent amount of money on yourself. If, on the other hand, you are a single mom, or your spouse makes less than you, or you are going through a career change, chances are, a bit of good old-fashioned frugality could take you a long way.

Get your financial questions answered.

Visit the Savvy Ladies Free Financial Helpline. 

Get the Expert Advice You Deserve.