We all love a luxury purchase. In affluent countries like ours, there are plenty of people that find exotic ways to spend their money on living the lifestyle they want.
Whether it’s buying a luxury boat to cruise Sydney Harbour, a fast car to drive on your weekends, or a share in the next Melbourne Cup winner, taking the plunge and investing money into something fun is on the radar for many Australians. And it’s hard to argue, try telling the owners of Winx that investing in her as a racehorse was a bad idea! On the flip side there are plenty of horse owners whose horses fail to even make the racetrack, let alone earn a winners check.
So when it comes to ‘lifestyle’ purchases, how do you avoid a financial headache?
Having hobbies isn’t a bad thing
Before I answer that question, it’s worth pointing out that having a hobby or pastime is not a negative. Take owning a luxury sports car as an example. The dream of owning an Aston Martin or a Ferrari is one that many people would aspire to. If you find yourself in the situation where you can actually afford one, then why shouldn’t you indulge in your passion?
There’s a feel good factor to it all. Having something you’re passionate about is good for your mental health; it helps you enjoy your life and is often a break from the reality of our ‘normal’ lives.
Ultimately, the urge to spend the money we’ve earned from our working lives on something we enjoy is understandable. At Apt we tell our clients to live for today, while planning for tomorrow. Investing money into the things you enjoy is all about living for today. It’s all part of achieving balance in your life.
Think about your finances
Like everything in life however, you have to consider the financial impact of what your luxury lifestyle choice will have. There are a few ways you can ensure that you don’t break the bank in pursuing your passion.
Budget for it
It might sound obvious and is something we often raise when it comes to any financial matter, but you really need to have a good understanding of where your money is going. Budgeting is crucial and if you are making a big luxury purchase, planning for it as a part of this is essential.
There are plenty of tools out there that can give you a better understanding of where you’re spending your money, including our own BeApt offering.
Save in other areas
Following on from setting a budget, the other basic rule to follow is: If you’re going to make a significant investment into a hobby, where else can you cut back in your spending to ensure it’s affordable?
This might mean eating in instead of a restaurant or cutting back on a night or two out with your friends, but these small sacrifices can go a long way to opening up funds to invest into something bigger in your life.
Avoid impulse buys
As exciting as it may be, thinking through a big purchase decision before you make it is crucial. Where people often find themselves in trouble is after making a big impulse buy and feeling guilty about it.
Planning and ensuring that is affordable will ensure you avoid buyer’s remorse and really enjoy the outcome of your lifestyle purchase.
Talk to your significant other
Another point is to consider ensuring that your partner or significant other is on the same page as you. It’s been reported that one in three Australians hide purchases from their partners. This is not a long-term strategy for success and can lead to significant strain on your relationship.
Ensuring that any purchase is discussed and agreed upon with your partner before parting with your cash can remove a point of tension before it happens.
In the end, we all want to make a lifestyle purchase some time in our lives. By engaging in financial planning as a part of the journey, you have a much greater chance of making your dream a reality.
General Advice warning
The information provided in this blog does not constitute ﬁnancial product advice. The information is of a general nature only and does not take into account your individual objectives, ﬁnancial situation or needs. It should not be used, relied upon, or treated as a substitute for speciﬁc professional advice. Apt Wealth Partners (AFSL 436121 ABN 49 159 583 847) recommends that you obtain professional advice before making any decision in relation to your particular requirements or circumstances.