How much should you spend on clothing per month?
If you’ve read our post on how to shop smart for clothes, you know that we are firm believers in the “look good, feel good” mentality.
The idea that the right outfit can improve your confidence is well-researched, and studies show that clothing can affect your success–meaning that you should invest in nice attire that makes you feel good. But shopping addictions and impulse buying habits are wealth-building’s biggest enemy. So what’s the balance?
How to decide your clothing budget
A quick Google search of the ideal clothing budget amount will tell you that your clothing budget should not exceed 5% of your monthly take-home pay.
Some financial experts advise that you should “live like no one else so you can live like no one else” meaning that you should spend money on only the essentials, leaving no room in your budget for shopping.
And then some fashion/lifestyle sites like Gwyneth Paltrow’s site Goop will tell you that a $4,000 gold charm bracelet is an essential “investment piece”.
Really, your ideal clothing budget depends on your lifestyle. WizeFi’s software will give you a personalized guideline as to the most strategic number of dollars to spend on clothes, but really, your ideal clothing budget depends on your income, your occupation, and your stage in your wealth-building journey.
How your occupation affects your clothing budget
Here’s a scenario: There are two real estate agents. One spends about 50 dollars a month on clothing–he typically shops at Costco. He always looks clean and his clothes are all relatively new, but he’s up against a real estate agent who wears higher-end clothing–that guy buys his suits from somewhere like Nordstrom.
This real estate agent probably spends 500 dollars per month on clothes, but people choose to work with him because he seems more professional–he looks like he put more effort into his appearance. Subconsciously, better-dressed people appear more successful.
So, in our scenario: one real estate agent spends $50 per month on clothes, as opposed to $500. But he also makes $3,000 dollars a month as opposed to $12,000 per month.
This scenario suggests that following a strict, low clothing budget isn’t always best for building wealth–sometimes, investing in your appearance will pay off in the form of more income.
But, it’s important to measure all of this–think about whether or not you’re in a profession where appearance matters, and then test out an increase in clothing spending to see if it has an impact on your confidence and/or workplace success.
How your income affects your clothing budget
In any budget, this idea is the same: the more you make, the more you have to spend… on everything.
If you make $120,000 per year, you’ll have more to spend on clothing than someone who makes $36,000 per year. There isn’t really a way to make $36,000 and spend as much on clothes as someone who makes $120,000 without engaging in fiscal irresponsibility.
You should use WizeFi to make sure that your spending on clothing is somewhere in the realm of your personalized guideline budget, that is, the spending pattern WizeFi provides that will get you to sustainable wealth the fastest.
However, even if your clothing budget is tight–there is a way to look like you make $120,000. Here’s our post on shopping smart on a budget.
How your wealth-building journey affects your clothing budget
One of the most common topics you hear about in personal finance is investing. Invest in stocks, invest in real estate, invest in foreign currency–but what major financial institutions sometimes miss is the concept of investing in yourself.
You are the most valuable entity in which you can invest. After all, your ability to earn an income is your most valuable asset–with more income comes a dramatic increase in wealth potential.
At WizeFi, we encourage investing once you get to stage four of our four-step wealth building model. This means you have paid off all your debt and have a fully-funded emergency fund and general savings account.
Investing in yourself comes in several forms:
- You can invest in education: A common habit among millionaires is lifelong learning. Investing in expanding your knowledge can come in forms of online courses, formal college education, or buying more books.
- You can invest in your psyche: This involves investing in things that help you have a stronger mental game. It can be simple and cheap, like meditation, or expensive, like hiring a fitness coach or taking a trip to the spa.
- You can invest in your appearance: You can buy yourself some nicer clothes. You can spend a little more on haircuts at a nice salon. It might even be as simple as getting a manicure once per week–whatever puts you in that “I look good” mood, do it. The research shows looking good improves your performance.
What if I can’t afford to invest in myself, yet?
Just as much as we don’t advise investing in mutual funds until you’re debt-free, we don’t advise investing in yourself until you’ve paid off all your debt.
But just because you can’t afford to invest in your attire, there is always a way to afford to look good where it counts.
Going back to the above real estate example: Say you want to be the guy that gets the business because he looks more professional, but you don’t have the ability to spend $500 per month on designer suits. Here are some options:
- Schedule your nice outfits: Buy yourself two high-quality outfits, and rotate them into your schedule where it matters. Perhaps you wear your nicer outfit on the day where you’re meeting clients, and then you wear regular, less expensive clothes when you’re in the office making calls.
- Mix and Match: Buy a few nice basics, and mix-and-match them to make several outfits out of a few good pieces. Here’s a good guide on mixing and matching for women and here’s one for men.
This all depends on your personality.
There are some people that couldn’t care less what they’re wearing and don’t feel like it would impact their work. If you’re someone who feels like you wouldn’t get a confidence boost from wearing a well-fitted, nice outfit, don’t sweat it! Just make sure you’re not overspending on clothes and keep up that wealth-building momentum.