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How to Make Expensive Purchases

Here’ exactly how to make expensive purchases (without feeling guilty) by using two proven systems: conscious spending and automated finances.

Ramit Sethi

People ask me all the time, “Ramit, I want to buy something, but I don’t know how to make expensive purchases without feeling guilty about what I spent. What do I do?”

Don’t worry. You can make expensive purchases without feeling guilty or judged. In fact, you should feel amazing spending money on things you love.

If you want to learn how to make any expensive purchase, you need to remember two systems:

  1. Conscious spending
  2. Automated finances

Those two systems will help you save for ANYTHING with enough time and money — and you can do it passively.

The best part? You can then make your expensive purchases guilt-free.

Think about how we typically approach making an expensive purchase:

  • Step 1: We see something we like
  • Step 2: We feel guilty and know we shouldn’t buy it
  • Step 3: We buy it anyway
  • Step 4: We feel even MORE guilty later

Repeat until your guilt forces you to relinquish all material goods and devote yourself to a life as a Buddhist hermit.

IWT isn’t about guilt. Though, I have no emotions so it’s difficult for me to relate.

Photoshop of Ramit Sethi as Spock
Let’s stop feeling guilty and start using the systems that’ll let us make any expensive purchase we want.

There’s only so much you can cut your spending, but there’s no limit to what you can earn. Learn how to create new income streams with my FREE Ultimate Guide to Making Money

How to make expensive purchases system #1: Conscious spending

Conscious spending is a fantastic system to spend money on anything guilt-free. It’s the same system my friend uses in order to spend more than $21,000 on going out.  

There’s a difference between people who consciously spend on things they love — even if they’re expensive — and people who simply buy whatever they want and deal with the consequences later.

When you consciously spend, you know exactly how much money you have to spend on anything even if it is expensive.

It’s OK to spend on expensive things if it’s done consciously (you know exactly how much you have to spend on specific purchases) and you’re saving/investing appropriately.

But to do that, we need to employ another proven system: Automated finances.

If you’re worried about your personal finances, you can improve them without even leaving your couch. Check out my Ultimate Guide to Personal Finance for tips you can implement TODAY.

How to make expensive purchases system #2: Automated finances

Automating your personal finances is the perfect system for anyone who loves:

  1. Passively saving and investing money
  2. Knowing exactly how much they have in their checking account to spend (even on expensive things!)
  3. Not worrying about paying bills/rent/car payment/mortgage/whatever each month

I promise you that once you automate your personal finances you’re going to feel an almost instant change to how you approach money. You’re going to know exactly how much you can spend each month because you got your house together.

No more wondering if you can make rent.

No more trying to find money to pay the light bill.

No more feeling guilty about that new pair of Jordans you want to buy.

And it’s simple: Each month when you get your paycheck, your money is automatically sent to pay your utilities and rent, invested in your Roth IRA and 401k, AND saved in your savings account for your expensive purchases.

How To Automate Your Finances Infographic
It takes just a few hours of your time to set it up — but when you do, you’re good for a long time (or at least until your financial situation changes, like when you get a raise).

And if you want to save up for any purchase, there’s no better way to do it than with a sub-savings account — a savings account you create to save for specific purchases or events.

Using my automated personal finance system, I use monthly automatic transfers to funnel money into each of my sub-accounts. Now that these transfers are in place, I’m getting closer to each of my goals automatically, month after month, without having to remember to set money aside.

Check out all the different sub-savings accounts I had in my old savings account:

Screenshot of Ramit's Sub Savings Accounts
Caption: ING Direct is now Capital One 360. BTW that wedding one is going to be put to good use
Here’s a look at a few sub-savings accounts I have now:

Screenshot of Ramit's New Sub-Savings Accounts
ING switched to Capital One 360, and I used the money I saved to buy an engagement ring
So set up a sub-savings account and start automatically putting money into it each month. If you need help, check out my article all about sub-savings accounts to get started.

This is an example of using a system to make sure you have the money needed for an expensive purchase. These sub-savings accounts can be for a new car, the new wardrobe, a trip you want to take … anything at all.

You can even set aside money for more nebulous things. See my “stupid mistakes.” Or maybe you can have a “for when my buddy insists on ‘just one more drink’” account.

Now, each time I want to spend money on an expensive purchase, I KNOW I have the money. Because I had been storing a little bit at a time automatically. And I can make the purchase stress-free.

Check out my video below to learn exactly how to set up your automated finances today and get started putting money into your sub-savings account.

If you’re worried about your personal finances, you can improve them without even leaving your couch. Check out my Ultimate Guide to Personal Finance for tips you can implement TODAY.

The framework for expensive purchases

Along with conscious spending and automated finances, it’s also important to put a framework around expensive purchases. The framework allows you to justify and manage paying for expensive things and can do wonders for you mentally.

What’s the framework? Intentionally putting up a barrier to the purchase. By creating a small intentional barrier, you can force yourself to realize whether it’s really worth it or not.

A while back, I had decided to switch gyms, but I didn’t sign up for a new gym immediately, so there was a time lapse between my memberships. When I finally did, I stopped short for a minute.

In my book, I talk about one study that shows how gym-goers dramatically overestimate how often they actually use their gym membership. So I knew a gym membership was rife with psychological motivators, and I decided to take advantage of that.

To start with, I knew a few things:

  1. I wanted to get a trainer
  2. I didn’t mind paying for value
  3. I wanted to accelerate my growth by paying for someone who is experienced and could help me achieve my goals

But even I’m not delusional enough to believe that I’m different than other people. Think about it: What’s the most common thing that happens with gym memberships? People pay for it, stop going after a month, then feel guilty for not going and paying hundreds and hundreds of dollars in unnecessary gym fees.

Regardless of how much I really believed I’d be different, and how much I really wanted a trainer, I decided to force myself to beat the odds first.

So before I hired a trainer, I wanted to see if I could justify the expense by how often I was making it to the gym. That was the 85% Solution — if I could make it at least 85% of the time, I would do it. I set a simple goal of going to the gym at least three times per week for one month, a gradual goal that would take sustained effort.

It’s important to not set a broad goal, but to be as specific as possible. So my goal was to go on Mondays, Wednesdays, and Fridays. I kept track of the days I went in a notebook.

Now, I didn’t stick to this plan 100%. Some days I didn’t feel like going, so I didn’t. When I didn’t go, I tried to go the next day, or an extra time the next week. Sometimes I was inspired to go on a day off, so I went. Other times I missed a day completely.

At the end of one month, I averaged going to the gym three times a week — right on track. So having met the larger challenge of actually going to the gym, I decided to go forward with the trainer.

Now, let’s figure out how to apply this to your life.

If you’re worried about your personal finances, you can improve them without even leaving your couch. Check out my Ultimate Guide to Personal Finance for tips you can implement TODAY.

How to decide whether to buy something expensive

Here are a few shortcuts on how to decide whether to buy something expensive:

  1. Use more. If you want to buy something, use more of what you have before you get something else. For example, I used to constantly buy SAT books in high school (I was a weirdo!). What I should have done was used the SAT book I already had and finished it before getting another one.
  2. Earn more. Earn more on the side to justify paying for something. This usually relates to time or selling an existing good to pay for something new.
  3. Dedicate more. Dedicate more time doing something to justify the cost. For me, the time I spent going to the gym justified the cost of a personal trainer.

More practical applications:

Trip to _____: How can you justify this cost? Are you learning the language before you go? If so, set a specific goal. Take language classes for a year. When you hit your goals, give yourself permission to spend the money on the trip.

Expensive makeup: How much unused makeup is sitting in your bathroom drawer right now? Don’t add more to the pile — before spending on expensive new makeup, use up all of what you have first.

Virtual assistant: Same goal as with the cleaning service — if you earn an extra $100/month on the side for three months straight, you can justify hiring a virtual assistant. I’ve talked about ways to use VAs before. Having the support of a good assistant can increase your productivity and efficiency and therefore help you earn even more.

Web designer: Your site has reached 1,000 visitors/day. Remember, I hate bloggers who focus on stats and hardly anyone cares about your design, BUT if more people are visiting your site and its design or user interface is important to you, then go for it.

Upgrading to business/first class: Set a certain percent you want to save. For example, “I want to get at least 40% off first-class tickets by reading Chris Guillebeau Unconventional Guide to Discount Airfare or” Or simply fly often enough to pay for first class with your travel rewards credit card.

Subscribing to a new service: I’ve written previously about how crazy people go when trying to save money on books, when they should really be trying to extract as much VALUE as possible. You can justify buying an expensive information product if you decide — ahead of time — what metrics it’s going to move the needle for. For example, “I can afford The Scrooge Strategy if I save $100 in the first month.” That’s eminently doable and it gives you a concrete reason to pay for something, even something extremely expensive.

Cleaning service: Give yourself the goal to earn an extra $100/month on the side for 3 months straight. Once you meet the goal, you can justify paying for a cleaning service because it frees up your time to earn more.

These questions to ask before you buy something expensive can be extremely helpful. Be sure to do it if you’re racked with guilt with a possible expensive purchase.

How to make expensive purchases less stressful

When you make an expensive purchase, it doesn’t have to come with guilt and stress too.

If you apply the right systems you can find the money to make expensive purchases AND earn money at the same time.

That’s why I want to offer you something:

The Ultimate Guide to Making Money
In it, I’ve included my best strategies to:

  • Create multiple income streams so you always have a consistent source of revenue.
  • Start your own business and escape the 9-to-5 for good.
  • Increase your income by thousands of dollars a year through side hustles like freelancing.

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  1. avatar

    Hey Ramit,

    one of the interesting things about your trainer analogy is that with a TRAINER, you often bypass the not going problem since you have accountability with a person that leads you to training.

    That is why group and accountability buddy systems are often good for reinforcing what one wants to do.

  2. avatar

    I am a woman who raised 2 daughters. Let’s just say clothing purchases were an ongoing point of contention while they were growing up. They wanted luxury, while I wanted to be able to put food on the table. We finally settled our differences when we made a “cost per use” rule. This is slightly different from your tips, but worked very well for us. It got my girls clothing they wanted, at prices I could afford.

    For example, a set of luxury items. such as a wedding outfit or prom attire, typically has a single wearing. Guys can rent that stuff, but rentals for women are practically non-existent. That meant we purchased those items from second-hand shops, e-bay, etc. Everything was in excellent condition (after all, the previous owner only wore the item once) and we saved literally thousands of dollars. Then we’d turn around and re-sell the items to further lower their actual cost. The girls looked great (Vera Wang dresses), but the expenses were minimal.

    On the other hand, my girls wore jeans or pants and casual shirts nearly every day of the year. While I wouldn’t spring for the cost of designer clothing, I had no problem buying high quality fabrics and materials and sewing garments that lasted (literally) 12-15 years. The upfront costs could be high, but the clothes were all highly distinctive and fit with exact precision. Cost per wearing using this method allowed luxury clothing for the girls at less than pennies per wear. They loved the clothing and I loved the actual cost over time.

    So a little creativity and logic can also net you luxury items without guilt and without breaking the bank.

  3. avatar

    On the other hand, do you count my method as a stupid frugality tip? Just curious, as I’ve never had a latte so I’ve never given one up.

  4. avatar

    I am doing an assortment of things that relate to the strategies in your article to replace my old clothing. I have a hard time justifying spending money on new clothes, but I know from experience that my clothing will last longer and is much more flattering for far longer if I buy from one particular, expensive, name brand store.

    So, before I allow myself to purchase new clothing, I have to get rid of something old that a.) doesn’t fit, b.) is too shabby/old to repair, or c.) I just don’t wear. This conserves a lot on space, and that way I am just “replacing” things rather than “hoarding” a vast collection of things I don’t need or use. If the clothing is still relatively nice, I donate it. Old t-shirts and socks get turned into rags or art projects if the fabric is pretty. That more or less fits with your “use more” strategy.

    The second strategy involved that I use is “earn more.” I have a pretty strict budget. If I really want something extra, whether it’s clothing or some other item that isn’t a necessity, I have to earn more money either through over time at work or my side business. Doing so makes my purchases feel much more worthwhile, not to mention guilt free, because I quite literally earned it.

    P.S. I’m a girl who doesn’t like shopping or spending money on clothes. No stereotypes allowed here. 😉

  5. avatar

    This is cool. I recently wrote a post on “One Tip that Saves Me Thousand” (it’s the first post on my blog).

    And a blog subscriber commented how my writings reminded him of your writing! 😛 Although I was flattered obviously :), I find it highly cool that you now write a post pretty much on the same topic. Of course, yours is much more useful (still!!! 😛 ).

    Ramit, great post! Because all of us need to be reminded that our dreams need to be converted into a plan!

  6. avatar

    I always seem to default to the ‘save more’ strategy, it is limited, you can only save so much. I am working on reprogramming myself to the ‘earn more’ strategy, which is unlimited. It is difficult, I guess it’s human nature to think in limits or negatively, it really takes effort to go to the positive (at least for me), in terms of just daily thoughts. I know from experience that the less money you have, the more time you spend dealing with it, trying to eek out a few extra dollars from multiple sources. It takes time away from what I could be doing, which is working on earning more money (and not passive income, lol). On that note, I’m off to focus on my business. Thanks for your great info Ramit, I am new to your book and site, it has been very helpful

  7. avatar

    I love to garden, and it can easily get expensive when you start thinking of how you want to landscape a certain area or improve the soil in another. I am applying your “use more” strategy by looking at what I can plant and do with what I already have. I’m trying to propagate some cuttings from our hydrangea bush and maximize what we can grow in areas already dug up before we start tearing up other parts of our lawn.

  8. avatar

    1)I have had great luck asking nearby gardeners for cuttings, perennial divisions, or seeds from their plants. If I do the labor, they usually give them to me for free. You can vastly expand your garden in this way for a bit of time.
    2) If you can locate a nearby stable or farm, you may also be able to acquire fertilizer (manure) for the cost of your picking it up and carting it home.
    3) Also, you should check to see if there is a Habitat for Humanity Restore near you. You may be able to pick up landscaping items for a fraction of their cost new.
    Happy gardening!

  9. avatar

    Hey Ramit,

    Since I already do a lot to “use more” and “earn more”, my favorite suggestion here is “spending more time” and the concept of having an intentional barrier to test your desire to make a large purchase or investment.

    I’ve found that most of my bigger purchases are usually purchased when I’ve already waited a “long” time and I “just can’t take it anymore” because I have to have [insert expensive item] already! I think the idea of forcing myself to do something more than just wait could be a great improvement on my spending habits.

    Next step: what intentional barrier can I create for myself before buying a new phone?


  10. avatar
    J. B. Rainsberger

    I remember reading two things that relate:

    Kiyosaki tells the story in Rich Dad, Poor Dad about his startup days after leaving Xerox: they didn’t buy anything unless it supported making a sale. True bootstrapping. Your gym example fits: you’re giving yourself a chance to use the gym membership, and if you prove you won’t use it, then you’ll stop paying for it. Sensible.

    “Your Money or Your Life” instructs the reader, after tracking real expenses over a few months, to run down the list of categories and ask “Do I value spending this money this way?” and encourages the reader to stop spending on the things that she doesn’t value. I use this tactic the most: I can answer the question “Do I really value this?” really brutally honestly. I combine this with the Life Energy per Dollar calculation in the book to quantify the expense in time. I can more easily say that a new computer will be worth 1,500 hours of my energy, but each mindless coffee doesn’t give me back even the 5 minutes it costs me to pay for it, since I waste that much time standing in line for it.

    Converting the expense into time units helps me answer the question, “Do I really want this?”

  11. avatar

    Has anyone used the resources Ramit mentioned in the post?:
    Unconventional Guide to Discount Airfare or

    Just wondering if people have found use in sources like these, and if it’s worth the initial cost.

  12. avatar
    Jason Martin

    As humans, we have the habit of tending off to bite more than we can chew.

    Realizing this, I try to make sure that all of my purchases and actions are stepping stones on the way to the goals I have and the directions I set for myself in life.

    I look at it that our awareness and our lives are a whole pie, 100% — everything that we own, buy, or do takes a slice of this pie. Everything has an opportunity cost; when you buy one thing you forgo buying another, when you do one action you’re doing it instead of another one that you could be doing.

    I ask myself, when making purchases or doing an activity, is this worth what I have to give up to do this? It also helps to look at all the obligations and contracts that we’re currently in, and ask this question.

  13. avatar

    I use these strategies:
    – never impulse-buy unless it’s low cost
    – employ mantras to keep spending in check, such as Ramit’s “use more” – for example, look at the clothes in my closet before I buy another jacket
    – employ a strategy as soon as I start craving something, for example, I really want a new camera, but I ask myself, “is this the thing I want the most, at the expense of other priorities?” And the answer is often, “no,” so it thwarts to the desire to make the purchase. This is my limited-resource strategy, acknowledging that only so much of my resources will go toward luxury spending.

    These strategies are really important since I have started my own business and am intent on saving.

    Also, I like to think of the gym attendance “intentional barrier” as more of a proof of commitment test, but I really like this step prior to making a big purchase. I will sometimes employ the “barrier” at work, because people will ask for things without thinking of the burden they place on me as a result of their request, but once the barrier is in place (e.g., have them do some extra work to obtain their commitment to the project), it helps me to ultimately allocate my time more effectively.

  14. avatar

    All three I agree with.
    1. use more – I started to do that in last year mostly. I noticed although I don’t buy many expensive things, sometimes I buy things I don’t really need. Through some big changes in my life, I was lucky to realize that and I’m testing it right now to see how to avoid and what things I really don’t need to buy. I think is the best way to go somewhere where you are happy and you don’t have an opportunity to spend money. For example, last time when I had day off I spend day at the beach, reading a book. I didn’t use my car to go there, I went by feet and I was feeling good later.
    2. earn more – I think that would be the best for me, but I’m not sure where to start
    3. spend more time doing something to justify the cost – when I’m at home and do things that make me improve at work or learn something new, then I know that my day is spend in a good way. I don’t feel I wasted my times in watching tv or just surfing an internet…

  15. avatar
    Max Ratnikov

    This is an interesting concept. I was on this track but you reinforced my view. If you are going to purchase something, make sure to use it at max potential. Similarly to time management, we always need to answer the question “Is it important?” and focus our limited resources on essential things. It is a simple idea but the challenge, as always, is to sustain it.

    Immediate action, I will use my TV for longer time.

    P.S. Ramit, you always talk how much you hate frugality. This post rather ode about saving. How does this go along with your general theme?

  16. avatar

    When combined, my husband and I are the perfect person. I’ve set up a system a la Claire’s Craigslist to find leads for contract web development work for him. I send out a personalized template with a link to his website and resume. It’s quick, and we’ve had a huge response rate so far. As unromantic as it sounds, I act as his manager to help him select only good and well-paying opportunities – there’s plenty of high-maintenance crap work out there and there’s no need to be a bottom-feeder.

    I am also looking for a new job and am setting up a similar system for myself this week. No harm in approaching the pursuit of full-time work like a freelancer.

    After thirteen years together we’re getting damn good at leveraging each others talents. After all, marriage is at least 50% business!

  17. avatar
    Cherleen @ My Personal Finance Journey

    I do not go shopping really often because I USE MORE of what we have to maximize the benefits of the things we have. There was am instance when a friend learned that we have been using our water heater for more than 10 years. The only thing she could say was, “You got more than what you paid for. You are now earning the profit from its actual cost.”

  18. avatar
    Bec at Dreamline Diary

    I get this post. To me it is the core of the conscious spending plan. It is about what you truly value in your life and how to ensure that what you want is something you want to spend money on. For instance, when I wanted an iPad, I made the decision that I wanted it, then I started saving all my loose change and 50% of any extra money I made went towards it. After about six months I had enough to buy it which I did last October. I then wrapped it up for myself for Christmas and I have enjoyed it every day since!

    As a side note on the concept of use more, I worked out how much value our $198 coffee machine purchased 4 years ago has given us. The equivalent in purchased coffee was over $5800. We are waiting for it to die, but could certainly justify spending the same or a bit more on a decent coffee machine.

    Spending money on things you love and not wasting money on the things you don’t is the most sensible financial advice ever. The conscious spending plan has changed my life. I tried it and loved it. Gave it up for a bit and was miserable. Now I am back on it, I will NEVER go back. Thank you Ramit for changing my life.

  19. avatar

    My answer to the question Ramit posed in the email, “Which strategy do you prefer?”, is both ‘Use More’ and ‘Spend more time’. I use them both strategies all of the time (without having realized it nor ever giving them a name). C-:

  20. avatar

    As far as wedding outfits or prom-attire, my girlfriend ran into the same issue in profession life as we started attending a number of black-tie events.

    Her solution: a website called “rent-the-runway” (google it, not sure of actual url)

    Basically it allows her to rent wonderful dresses and gowns for a single wearing at a reasonable price. Why buy a $700 dress for one wearing, when you can rent it for $30-50?

  21. avatar
    Tim Thompson

    Interesting article. The real question really shouldn’t be on how you can save 40% on getting first class air fare, or whether you should get the lower cost item of what you’re considering, but whether you really need it in the first place.

    I wrote an article on this very topic at!/2012/05/board-every-little-bit-helps.html where I use the example of a $4 latte habit with Starbucks. Whether you’re looking at buying a new TV, getting a first class ticket, etc. you should first be asking yourself what the item really costs since you’re foregoing the ability to invest that money instead. Secondly, you should be asking yourself do I really need this? Lastly, after looking at the opportunity cost of the purchase, decide if it’s really worth the actual cost.