Luxury vs. Luxury – Which One is Better?

Kon and I have lived frugally ever since we got married. We have always believed that spending should lag behind earnings. Our philosophy is, “Live below your means until you can afford to live within your means.” This approach has helped us avoid living beyond our means, getting in debt, and eventually going bankrupt if things don’t go our way.

Now as we are growing our companies, we are starting to think about our philosophy regarding luxurious living. What does luxury mean? For example, is it worth buying an expensive car just for the status symbol instead of buying a functional car with amenities that add value? Or buying a Rolex watch and other “toys” that wealthy people buy just to show off their wealth?

There are two types of luxury. The first type involves buying costly yet nonfunctional trinkets such as expensive jewelry that you can’t wear or a race car that you can’t drive within the city speed limits. I believe that this type of luxury is just frivolous spending. It does not accomplish anything besides making one feel like they are a part of the upper class – though deep down you know that this is all for show and that these trinkets can be quite risky in the long term if you run out of money to pay for them. Besides, this type of luxury promotes an endless rat race of “keeping up with the Joneses.” When you hang out with people who flaunt luxurious items and you are tempted to do the same, you will always be under pressure to keep buying and showing off in order to maintain your status in the social circle. You might get immediate gratification from buying a useless status item, but in the long term it can result in stressful waste of money. Even if you think that you “deserve” a Rolex or a Lamborghini, does it mean that you really need it? Will it prove to be a wise investment in the long term?

The other type of luxury is investing in yourself and your children or paying for your hobbies – for example, buying extravagant vacations or high-end musical instruments, hiring the best tutors and purchasing private lessons, spending extra on organic and high-end food because you want to eat healthy, and other luxurious but also useful pursuits. This might also include a top-notch house (functional, not excessive) for a big family, especially if more space is needed, if you want to install a costly but very functional salt-water pool or have a spacious workout room. This also includes spending money to buy time – hiring professional help so you can delegate chores such as cleaning, cooking, house repairs to free up your time.

This type of luxury is very functional and value-oriented. You are getting a lot of value out of the experience, and even though it might cost more than alternative cheaper options, you feel that getting this type of experience will enhance your life so the cost is worth it. It’s important to remember that this type of spending should always be done when your finances are on a solid footing. You will appreciate this a lot more when you’ve spent many years living on a budget and not wanting to spend more than you can afford. The low-budget living experience will make the delayed gratification of expensive treats so much more gratifying: there is nothing that’s going to hold you back because you are not trying to pretend to be someone you are not. This type of luxury is something you worked hard to achieve, and you know that you definitely deserve it. This is the type of luxury you are going to grow into because you can always ramp up gradually rather than going from 0 to 100 without anything in-between. You will appreciate the experience so much more when it’s a reward that you’ve earned rather than borrowed for a few brief moments – because let’s face it, useless luxury is not going to last since it is not meant to last.

We are happy not because we own things but because we get meaningful experiences that make our life worth it. It is more important to buy time and experiences to share with those who make our life meaningful than to own things that only make us happy for a brief moment.