Fashion investments: how I budget & save

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As much as style gurus would have us believe otherwise, majority of fashion investments provide no investment returns like traditional financial investments for e.g. retirement accounts. I wanted to get this out of the way before proceeding further because I strongly believe women should pursue investments with solid returns over inconsequential fashion investments. That being said, if you can afford, I don’t see anything wrong with spending more on style pieces that bring you joy and boost your self-confidence.

Fashion investments also are not a one size fits all. Depending on financial status, some would see a Zara blazer as an investment, whereas others wouldn’t even consider the most expensive designer bags as investments items per se. There is no shame in what a fashion investment piece looks like for you. All that matters is that it serves the purpose you’ve bought it for and lasts you a long time.

In this post, I want to share some considerations I have prior to making a fashion investment. For context, I’ve been working for over five years and despite having more than tripled my starting salary, I can count my fashion investments on one hand with fingers to spare for more. It’s pertinent to let you know this because I’m not someone who’s always on the hunt for the next big fashion investment. I’m a lot more measured about how I spend my income and the pieces I bring into my wardrobe.

Without further ado, let me share some considerations I take into account before pulling the trigger on a fashion investment, including budgeting, saving, and assessing whether the investment will add value to my life.

Clarity on my financial goals

Clarity over financial goals is crucial prior to frivolously spending on fashion and regretting it later. You may have more disposable income than someone else yet not spend it as generously because you have different financial goals for e.g. saving to retire early or paying off debt. You must be clear about these goals in order to prioritize them and accordingly spend your money.

Until 2020, my main financial goals were to pay off my undergrad student loan and buy a house with my partner. I saved every penny towards these goals and kept myself on a tight budget. This made big purchases out of question most of the time.

After accomplishing both these goals, I had a period of high spending because I wasn’t clear on my next financial goal. Thankfully, I quickly realized that behavior wasn’t sustainable and created new financial goals to center myself; albeit, this time with more room for frivolous spending than before. But even now, I first prioritize hitting my saving and investment targets and only after indulge in fashion investments.

My budget for fashion investments

I often wonder how people come to the number that is right for them to spend on fashion. I don’t know how he reached this percentage but Peter Dunn, an award-winning financial planner, recommends a typical household to spend 5% of their monthly income after tax on apparel. Of course, this varies based on income and financial goals. For e.g. when I had student debt, I spent little to nothing on fashion.

In my current circumstances, however, Dunn’s recommended 5% of monthly take home pay works. In order to have a big picture view of my budget, I take 5% of my monthly income after tax and multiply it by 12. That gives me my annual budget*, which I use as a north star during the year.

The annual fashion budget keeps my spending in check over the year. If I go over some months then I know the next few months I’ve to lay low. Usually, if I see an item on my wishlist that costs more than my monthly shopping budget (fashion investment) then I’m prepared to have no buy months to save up for that item. All in all, the goal is to not exceed my annual shopping budget.

*_{The compensation I receive on top of my monthly income like annual bonuses, etc. aren’t accounted for in the annual fashion budget. As in I don’t use 5% of that compensation towards the budget because I tend to decide how I will use my bonuses closer to receiving them.}

Fashion investments that are worth it for me

In the world of aggressive influencer marketing, everything under the sky is worth it. This is partly why I don’t follow content creators who’re constantly pushing their community to buy. Firstly, it’s not good for the pocket. Secondly, aggressive marketing tactics are disastrous for your mental health. Either you spend beyond your means or you don’t and feel unhappy about what you don’t have instead of feel happy with what you have.

This begs the question that if not through the lens of our favorite influencers then how do you determine if a fashion investment is worth it? For me, the absolute first consideration is if the item even fits in my budget. After I am certain that I can afford the purchase, I employ the cost per wear test. Put simply, cost per wear is equal to the cost of the item divided by how many times you wear it. I want the cost per wear to be very low to get the most bang for my buck. If cost per wear interests you, read here how you can calculate the optimal cost per wear for your budget and lifestyle.

The second test a potential purchase has to pass is how long it can stay on my wish list. I’ve a wishlist of things I want overtime. Generally, I aim to at least wait a month before buying something. For investment purchases, I even wait years. The waiting period helps me determine if I truly want that item or if I’m being swayed by trends. This step is crucial because it helps me be more mindful and avoid regretful purchases.

Planning ahead for fashion investments

Are you rolling your eyes over how much of a killjoy I’m? First, I lectured over annual budgets and now I’m talking about more planning. I don’t blame you but promise planning ahead will save you financial regrets down the road. There are two ways in which I plan ahead.

Firstly, I put away about 1-2% of my monthly paycheck after tax into a “save to spend” account*. I treat the money accumulated over time into my “save to spend” account as sacred. I only withdraw from this account for items otherwise not budgeted for e.g. an unforeseen trip. While this money isn’t for fashion investments, I view it as a spending cushion in case I ever really wanted an item that was pushing the limit of my annual budget.

Secondly, before pulling the trigger on any purchase, I research if I can find a way to pay less than the full price. This includes buying pre-loved and waiting for sales to shop. For e.g., I bought my Burberry Trench from an ebay seller. It came in original packaging with tags attached, but was half the price I would have paid in store. Similarly, although I bought my Saint Laurent tote new, I got it 35% off at Fashionette. I had the tote marked as a wishlist item on different online retailers. When it was discounted on Fashionette, I bought it.

*_{This account is just a division of my savings account.}

Final thoughts

I hope that reading how I budget for fashion investments helps you in facilitating your own approach to them. I understand that everybody is positioned differently financially. So, at the end of the day, you’re the best judge of what will work for you. My top tip is to do you and not be swayed by trends!

As always, thanks for stopping by my blog and giving my thoughts your time of day! Let me know in the comments if this post was helpful or if you’ve tips of your own to share!

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