I’m contemplating on purchasing a bracelet that would cost about 1% of our entire net worth. It seems like a totally crazy idea, because it also could be a downpayment for an inexpensive investment property. What do you tell yourself in a situation like this? Would it be too much money spent on a jewellery item or would you consider it normal?
Jewellery vs Net worth
- Thread starter Mishella
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….I’m not real estate savvy nor do I dabble in investments or play around much with my finances but this is not something I would do. (Or I guess I’m not comfortable doing something like this.)
Personally I don’t find fine jewelry to be an investment. If anything, in terms of investment only, I’d rather buy gold bars than jewelry.
And when you talk about net worth, the way you describe it is confusing…
That’s all I’m okay with saying. I’m really not that experienced so hopefully someone here will give better input.
Personally I don’t find fine jewelry to be an investment. If anything, in terms of investment only, I’d rather buy gold bars than jewelry.
And when you talk about net worth, the way you describe it is confusing…
That’s all I’m okay with saying. I’m really not that experienced so hopefully someone here will give better input.
The question was not about investment advice, but the percent of income or net worth you feel is adequate to spend on jewellery. I’m basically just trying to find out an average for most people in that regard.
PF is eye opening. If your net worth is $700,000 and you spent $7000 on a piece of jewelry, I’d say that you are not at the point where the marginal utility of the $7000 is insignificant. But I guess given your survey question some might even feel comfortable spending much more. Different strokes for different folks.
I would not personally feel comfortable spending anywhere near these percentages, but agree with @Suncatcher, different strokes for different folks. Jewelry, for the most part, also depreciates substantially.
My personal rule is to consider how much else I could buy instead of that item (or what I am sacrificing to have the item in question). For my personal income level for example, I have to think if I buy a bag or jewelry piece, is it something that I can wear while taking my kids on vacation, or was that the vacation budget I just spent? lol
With regards to net worth, are you including your retirement savings in that figure? The equity on your house? It is an interesting way to look at it. I'm not sure it would necessarily be a good indicator of whether or not you could really afford the piece. Seems like cash flow and overall financial health would be a better indicator. I would say that if you had proper retirement savings going (and you contribute every month if you're still working), proper emergency savings, etc., AND you can easily pay your bills every month, plus have extra for fun stuff, then I don't see why you couldn't splurge on yourself just this once.
For example, if your net worth was $1M, then you are only talking about spending $10K on a piece. But if that net worth is mostly in assets that you can't really touch, like your house and retirement, then you may not have enough in your checking and savings accounts to make it a safe purchase. Again, using myself as an example, I have a certain amount in home equity and retirement savings, but we put so much into various savings funds each month that our cash flow is limited. So, using a net worth percentage would make it look like I could afford more than I really could.
Also, I'm also not sure if you are using the down payment on an investment property as an example of something that is in the same price range, or if you are saying that an investment property is something you are genuinely considering. If you are considering an investment property, one option would be to get the property and use a portion of the profits to save into a "special jewelry" fund and get that special piece later.
Whether someone spends a good chunk of their money on something that will make more money, or give them immediate pleasure is a very personal choice. Realistically, many people are probably spending way more than 1% of their net worth on luxury goods and services. Is this coming at the cost of setting up a safe and secure future? That's something each person has to answer for themselves as circumstances vary.
Best of luck with whatever you choose to do!
With regards to net worth, are you including your retirement savings in that figure? The equity on your house? It is an interesting way to look at it. I'm not sure it would necessarily be a good indicator of whether or not you could really afford the piece. Seems like cash flow and overall financial health would be a better indicator. I would say that if you had proper retirement savings going (and you contribute every month if you're still working), proper emergency savings, etc., AND you can easily pay your bills every month, plus have extra for fun stuff, then I don't see why you couldn't splurge on yourself just this once.
For example, if your net worth was $1M, then you are only talking about spending $10K on a piece. But if that net worth is mostly in assets that you can't really touch, like your house and retirement, then you may not have enough in your checking and savings accounts to make it a safe purchase. Again, using myself as an example, I have a certain amount in home equity and retirement savings, but we put so much into various savings funds each month that our cash flow is limited. So, using a net worth percentage would make it look like I could afford more than I really could.
Also, I'm also not sure if you are using the down payment on an investment property as an example of something that is in the same price range, or if you are saying that an investment property is something you are genuinely considering. If you are considering an investment property, one option would be to get the property and use a portion of the profits to save into a "special jewelry" fund and get that special piece later.
Whether someone spends a good chunk of their money on something that will make more money, or give them immediate pleasure is a very personal choice. Realistically, many people are probably spending way more than 1% of their net worth on luxury goods and services. Is this coming at the cost of setting up a safe and secure future? That's something each person has to answer for themselves as circumstances vary.
Best of luck with whatever you choose to do!
I’m just here for the jewelry! Can you please show us?
We are already very far from “get this or get that” situation, and our own house and retirement savings do not comprise a really significant part of our nw. So it’s definitely not a question of financial stability, but more like “that’s a big number to spend at once, let me see what other people who also love luxury do”My personal rule is to consider how much else I could buy instead of that item (or what I am sacrificing to have the item in question). For my personal income level for example, I have to think if I buy a bag or jewelry piece, is it something that I can wear while taking my kids on vacation, or was that the vacation budget I just spent? lol
With regards to net worth, are you including your retirement savings in that figure? The equity on your house? It is an interesting way to look at it. I'm not sure it would necessarily be a good indicator of whether or not you could really afford the piece. Seems like cash flow and overall financial health would be a better indicator. I would say that if you had proper retirement savings going (and you contribute every month if you're still working), proper emergency savings, etc., AND you can easily pay your bills every month, plus have extra for fun stuff, then I don't see why you couldn't splurge on yourself just this once.
For example, if your net worth was $1M, then you are only talking about spending $10K on a piece. But if that net worth is mostly in assets that you can't really touch, like your house and retirement, then you may not have enough in your checking and savings accounts to make it a safe purchase. Again, using myself as an example, I have a certain amount in home equity and retirement savings, but we put so much into various savings funds each month that our cash flow is limited. So, using a net worth percentage would make it look like I could afford more than I really could.
Also, I'm also not sure if you are using the down payment on an investment property as an example of something that is in the same price range, or if you are saying that an investment property is something you are genuinely considering. If you are considering an investment property, one option would be to get the property and use a portion of the profits to save into a "special jewelry" fund and get that special piece later.
Whether someone spends a good chunk of their money on something that will make more money, or give them immediate pleasure is a very personal choice. Realistically, many people are probably spending way more than 1% of their net worth on luxury goods and services. Is this coming at the cost of setting up a safe and secure future? That's something each person has to answer for themselves as circumstances vary.
Best of luck with whatever you choose to do!
If you're financially stable and have the means for it, why not? I say go for it. We're not going to live forever.
What an interesting question. I’ve never thought about purchases as a percentage of net worth. For myself, I wouldn’t spend that much on one item as I like to buy jewelry, purses, house items, etc. throughout the year, rather than planning and being more intentional with my spend. I think it’s a personal preference on how you spend your disposable income, regardless of what percentage it is of your net worth. I prefer to set general budget % guardrails and then I do whatever I wish within that guardrail. One thing I’ve learned over the years is that for me, the disposable income ends up getting spent every year, so I may as well do what I wish with it!
I honestly did not know people finance their engagement rings. Is this really a thing? Why not buy what you can afford without incurring debt?
Yes, it’s very common to finance engagement rings, weddings, etc. I have no idea why people think that financing a jewelry item is ok, especially knowing that less than 9% of people end up insuring their items and can lose them anytime.