I used to be excited when I bought something on sale. The “deal” was my indication of success. In hind sight, I wasted a lot of money with this mindset. Price is only one part of the equation.
A better way to think about your purchases is to determine the cost per use.
For example, when I changed jobs 3 years ago, I needed a lap top bag for client appointments. Professional looking was a must and something sturdy was vital. I decided on a black Michael Kors tote so it could double as a purse. I’ve used it just about every day for three years now and it looks brand new. I anticipate it will last at least another two years.
That tote was a great purchase. It was about $250.00 at the Michael Kors factory outlet store (not on sale.) Since the purse is a classic style, made to last many seasons and goes with everything I own, it was a winner.
Let’s look at the cost per use of my designer laptop bag purchase. I’ll use it 5 days a week for 50 weeks out of the year (since I love it so much, it’s always by my side.) The tote is intended to last 5 years – after 3, it still looks brand new.
The break down:
5 days a week x 50 weeks = 250 days a year
x 5 years = 1,250 uses
$250/1,250 = $0.20
Cost per use for designer laptop tote/purse = 20 cents per use
Let’s compare my purchase to a less expensive tote that would last one season because it wouldn’t hold up to constant use or we’d get tired of it because it wasn’t fabulous.
Nice lap top tote bag for $78. This bag is anticipated to last one season.
Let’s check out the cost per use.
5 days a week x 50 weeks = 250 days per year
x 1 year = 250 uses
$78/250 = $0.24 per use
Rounded up, it costs about 25 cents a use for the bag for one year. It costs slightly more per use than the fancy bag.
So what would you rather have though, something you really love that’s special or something basic you’d need to replace each year?
I vote for fabulous.
If you take really good care of your things, and have the funds to make the initial investment in a higher quality item, you could end up either paying less in the long run or having something nicer (or both.)
Remember: The longer you keep your stuff and the more you use it, the better the cost per use — in every single case.
I still love my bag and even use it on the weekends. What about you? What was your absolute best clothing or accessory purchase? Please tell!
Check out my Tightwad Tuesday Episode 10 video on how to determine if your purchase could be considered an expense or an investment.
Strategy is everything.
If you started saving late, you need more than just a 401(k) to fund your retirement.
7 Retirement Lessons For Late Starters