I wondered, there must be a way that rich people make buying decisions. I continued to scroll through the page. Carmina shoemaker produces some of the finest shoes in the world. One pair might only be about $600. I can afford it. Should I afford it though? I want to take care of myself right? I started to stretch the justification. My feet should have the most comfort! But, no. I should not buy the best of everything because ‘I have the money.’

In this post, I will be explaining the three categories that purchases divide into. They are disposable, affordable quality, and luxury or heirloom. Before a wealthy person buys an item they will consider these three categories. This becomes a subconscious act. No, wealthy people do not buy everything in gold. In fact, the more money a person has earned the more they see its value. They also recognize the opportunity cost of not investing. Now, for the first category.

Disposable

A disposable item can be simple every day items such as floss or gasoline. But, there are more disposable items than what is obvious. For example, think of an umbrella. Almost every umbrella will get flipped inside out enough and break. This is a disposable item. Do not buy a $1,000 handmade umbrella with gold accents and wood carving. It will break all the same. You may be afraid to use it too. Aside from the employee, who sold you an expensive umbrella, no one will notice it. Buy a $30 umbrella. Use it until it busts. Get another.

Pro tip: Any item with corporate logo is a disposable item.

Buying Affordable Quality

Think of an item that you would not want to throw away after a few uses. These items may be more expensive, but have quality as well. Some examples are clothing, tools, and electronics. Do not buy a $5 t-shirt that tears after two uses. Buy a $30 t-shirt that will last a few years. This will make you look better, and save you money by bringing down your cost per wear. What is cost per wear? Divide the cost of the item by the number of times you will use it before throwing away. For the cheap t-shirt $5 divided by two wears results in a $2.50 cost per wear. For the quality yet affordable t-shirt $30 divided by sixty wears equals $0.50 cost per wear.

Note that a quality item will still wear out. But, it will take longer than a disposable item. Also, quality does not mean that the item will hold or increase in value. The price ranges in this category are large. The best strategy is to find a brand that you like, fits, and is available.

Pro tip: The wealthy try to avoid branding. They understand that they are worth too much to give free advertising on their body. Also, the shopper pays for the marketing campaign. Some brands will sacrifice their quality. Then, they will have more money run their marketing campaigns.

Luxury or Heirloom items for Rich People

The wealthy buy in this category the least often. The items are handmade, made of precious metals, or are average quality with loud branding.

Take a doorstop for example. A wealthy person can buy one made of solid gold. But why? What extra value does a solid gold doorstop provide over an affordable quality one? None. Despite having the money – a wealthy person would not buy this.

There is an exception though. The wealthy will spend on items that can become heirlooms. For example, furniture, watches, and jewelry. These items will usually keep their value. In rare cases, they will increase in value. Wealthy people will also assign stories to these items. “I bought this watch when I sold my first company.” or “This was my grandmothers engagement ring.” Although, with jewelry, the real stuff will be a handful of pieces. The everyday items are costume jewelry. Theft and loss are more common for these items. Costume jewelry confers the same status as real jewelry in public. But, there is no burden to losing it. If there is no intention to pass the item on to the next generation then why spend much money on it at all.

Luxury Fashion Brands

A note on fashion brands. A fashionable purse is hand sewn leather, attached to a painted canvas. That is all. Few hold value, while the vast majority do not. Fashionable shoes and shirts are no more durable than a quality affordable item. This means the cost per wear is terrible.

There are a few thoughts that are often overlooked when dealing with luxury items. If the luxury item is of an heirloom quality, it should have insurance, which could cost $100s a year. The insurance payout will not make up for the sentimental loss, but it will make up for the real loss in value. Also, delicate materials are frequent with handmade items. Cashmere is very soft. But, you cannot wash it in a typical washing machine. You must care for silver by polishing it or it will tarnish. Silver may need special packaging as well. The more luxury items you have, the more you will spend you time with ongoing care.

Pro tip: If you do buy a luxury fashion item, then buy an item that the brand represents. This will increase the chance of a resale when you grow tired of the item.

Conclusion

Before they buy, the wealthy determine if this is a disposable item, if it needs to last, or if it will be an heirloom. Thinking about these three product categories is how rich people make buying decisions. But, the wealthy will always know what their money can become if they invested it instead. More on that in a future post.

-Stay Wealthy

P.S. if you do own a luxury item and someone makes a rude comment about it… please read my first post here.