19 Nov Fancy Clothes Will Ruin Your Future
Saving money on your clothing purchases may not make you rich, but unrestrained clothing expenditures can certainly destroy your financial future. I frequently see colleagues who wear outfits that retail upwards in the $2000 range! As a doctor, you have to appear financially fit and suited for the job, right?
Take, for instance, an outfit suitable for a business meeting:
- Tory Burch Flats – $235
- Kate Spade Crossbody – $325
- Salvatore Ferragamo watch – $1200
- Tory Burch Belt – $150
- Budget Burberry Jacket: $800
- BOSS power suit: $400
Perhaps your other wardrobe is slightly more modest, at $400 per day of wear. Let’s say you have 10 days worth of outerwear that costs $400 per outfit. That’s $4000 of professional attire plus maybe two sets of meeting/conference clothing at $3000 per set. That’s $10,000 of professional clothing, not including any additional shoes, cost of hair products, or underwear!
Those of you who are not in a business/professional type career that requires formal clothing may be shocked at the seemingly frivolous scenario, but this indeed happens. I’ve seen medical residents with a similar degree of retail addiction (both women and men). The desire for fancy attire makes no concessions on your income level. In fact, the higher spending power from a high salary will only fuel consumption.
True Cost of $10,000 worth of clothing on a $200,000 salary.
Suppose you are an allergist who commands a $200,000 annually salary. You are single and unfortunately just made it into the 33% federal tax bracket for 2015. You live in New York City, and have to pay an additional 6.65% in state income tax plus $1,706 and 3.64% of you income over $50,000. Basically, you have to earn 33%+6.65%+3.64% more than what you spend at a marginal tax level. In order to buy $10,000 worth of clothing for a NYC resident, you’d have to earn at least $17,633.57 from a $200,000 salary!
That amount of pretax dollars can fund an entire year’s worth of 401k! For most people, that is serious money.
Your Behavior Towards Money Impacts Your Financial Future.
The problem with spending $10,000 in post-tax dollars every year isn’t because you can’t afford it. You can. The problem is that because you can afford it, you can also afford to purchase many other goods and services that you might not need. A $200 blow-out? Sure! A lease on the newest Mercedes C-Class is only another $500 a month! After all, you have to look the part like a doctor.
We all have our splurges. We didn’t work so hard during our younger days to keep depriving ourselves either. But as a whole, doctors don’t really have much financial sense. One of my good friends leased a 7-series BMW on his first job as a cardiologist. I’m sure it felt good. I’m sure it also is digging into his retirement fund. Is it worth spending your daily 1 hour commute in a luxury vehicle at the expense of saving one whole year of retirement in a thirty year career? If your answer is yes, then by all means, do it.
Compare Your Expenses As a Cost To Your Retirement Dreams.
Think about what your daily routine would be if you were independently wealthy. Don’t consider what you’d do for social reasons or to make yourself look good to the world. Would it be to practice medicine? Or hanging out on the golf range, or even buying clothes? Consider a realistic age to be enjoying your retirement, and then assess every big expenditure’s impact on your retirement goals. Consider whether buying those FENDI sunglasses is worth taking an extra weekend of call. Is that annual vacation to Maldives worth it to work an extra 3 years? If your retirement dreams include unrestricted clothing purchases, perhaps you could consider an alternative career in clothing testing?