All of us get the urge to splurge sometimes, and any budgeting expert worth their salt knows that, which is why they generally champion setting aside some money to indulge in wants without harming your financial health. That said, it’s all too easy to go too far with what could start as an innocent splurge and put yourself into peril. If you’re living on a frugal budget and working to save for a comfortable retirement, you have to tread carefully.
Find Out: I’m a Financial Advisor: My Wealthiest Clients All Do These 3 Things
Read Next: 4 Low-Risk Ways To Build Your Savings in 2025
A big part of knowing which splurges are safe to make is knowing which splurges will put you in the red zone. Of course, everyone’s situation is different and some folks will be able to go a little more nuts with spending than others without exposing themselves to risk. But as a general rule of thumb, you should avoid the following four purchases, which certified financial planners (CFPs) say could derail your wealth goals.
It’s not just car enthusiasts who may feel a bit weak in the knees when they see a gorgeous luxury car vroom by; anyone infatuated with status symbols or sumptuous, high-quality experiences may find their minds wandering with envy at the sight of a stunning Porsche. But luxury cars are generally bad investments and can be total money pits.
“The big issue with luxury cars is that while most people can afford them initially, problems arise when their income decreases,” said R.J. Weiss, CFP, CEO of The Ways to Wealth. “At that point, switching to a non-luxury car often feels difficult. Because luxury cars are such a visible purchase, many people fall into the habit of overbuying vehicles, even when it’s no longer financially sustainable.”
Learn More: Are You Rich or Middle Class? 8 Ways To Tell That Go Beyond Your Paycheck
Which experience would you prefer when you next visit Europe: staying in a hostel or staying in a five-star hotel? The majority of folks would opt for the hotel without hesitation. But these high-end travel experiences can really blow up your financial life.
“Like luxury cars, it’s hard to return once you’ve stayed in a five-star hotel,” Weiss said. “People who’ve traveled in style — spending $10,000+ on a vacation, which might have been reasonable for their income at the time — often want to recreate that same experience, even if their financial situation has changed. It’s not that you can’t splurge occasionally, but it’s important to recognize and remind yourself that this is a ‘once-in-a-lifetime’ thing, not a habit to maintain.”
