$600 Shoes...are you kidding me?

Photo: My slightly used yard shoes. I definitely did not spend $600 on them.


As a society, we spend way too much on things that are unnecessary. Shoes are necessary, but are $600 shoes necessary? 

DEFINATELY NOT!

I was completely shocked the other day when I heard that one of my friends was contemplating buying $600 shoes. My response was, "Are you kidding me?" It took all the energy I could muster to talk with them calmly about this stupid decision.

As a personal finance blogger, I hold very strict opinions about certain things financially. For example, I think it is stupid to buy a new car, unless you are millionaire. I think that you should save at least 20-30% of your income every month. I think it is stupid to spend lot's of money on wants. That is exactly what buying a pair of shoes for $600 is, it's stupid.

And as a personal finance blogger, I try not to push my financial views on people in person (I have no problem doing it on here). On this website, you have the choice to read or not read my articles. In person, I like to let people ask me questions before I push my opinions on them. This was one instance, where I couldn't hold back. I needed to educate my friend, and it had to happen fast. 

To educate my friend, I gave them two important items to think about when talking yourself out of bad decisions.

Number 1

Always look at things from the perspective of needs and wants. Sometimes we all need a new pair of shoes. This can happen when your everyday shoes get a hole in them or you need some new dress shoes for work. I have tennis shoes, dress shoes, boots, sandals and old shoes (for working outdoors). So, I have shoes and I understand the importance of them, but there is a time and a place for buying shoes. The cost should be a factor in purchasing shoes.

No, I for one will never buy a $600 pair of shoes, but if you have a million dollars, then I would not stop you from buying them. That's the threshold. If you don't have a million dollars, then you should not be buying shoes that cost $600. That's a luxury and you don't have the money to be wasting it on a luxury. You need that money for investing.

Number 2

Look at things from the financial perspective. That $600 can be put to good work for the future. If you invest that money today, it could grow be a substantial amount of money. Let's assume you invest that money in an account earning around 8% annually and invest nothing more than the plain $600.

  • In ten years, the money would grow to $1,331.78.
  • In twenty years, the money would grow to $2,956.08.
  • In thirty years, the money would grow to $6,561.44.

If you invest the money instead of spending it, it could end up being worth $6,561.44 in 30 years. So essentially, that $600 pair of shoes could be costing your future self $6,561.44. Now, that may not seem like a lot of money, but that's because we didn't invest anything more on top of that initial investment. Let's assume you make this $600 mistake twice a year. That would be $1200 a year or $100 a month that you are wasting. Instead of wasting it, we will invest $100 a month with same assumptions of 8% earnings annually.

  • In ten years, the money would grow to $18,294.60.
  • In twenty years, the money would grow to $58,902.04.
  • In thirty years, the money would grow to $149,035.94.

The data above would be somebody who spends $600 twice a year on a pair of shoes. They continue this trend every year for 30 years. If they would have invested the money instead of perpetually buying new shoes, they would have $18,294.60 in ten years and almost $150,000 in 30 years. That's only with investing $100 a month. Think of what could happen if you invest more than $100 each month.

In Conclusion

We can become very petty with everything that we can have in this society. There are so many things to buy that we don't even need from new video games, to clothing, to TVs and much more. We have become a society that worships stuff. This stuff can hurt your financial footing. It can keep you from having a healthy retirement account. These so called needs could place financial strain on your family. There are so many other things to purchase with our money. We only have so much money and we can't buy everything, so we have to decide. We have to put restraints on ourselves.

There are bumper stickers around that state, "I am spending my children's inheritance." People who live with this mindset buy $600 shoes and other outrageous items. They live for today and don't think about the future. These people will be struggling in retirement, because they did not ensure that their family would have money when it reached that point. Don't go around spending your money frivolously. Instead, plan and purchase items that you absolutely need while preparing for retirement. When you are prepared for retirement, then you won't have to worry about where your money is coming from. Your kids won't have to help support you financially. That's the goal, to have enough money to live comfortably in retirement. Everything else is petty and unnecessary.

Reaching the Financial Summit, Starts with You!

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