Finance Friday

Finance Fridays: Closet Wealth

As a child, I dreamed of one day having my own job where I made lots of money so that I could buy nice things, mainly nice clothes.  Interestingly enough, when I became 18 years old my dream changed when I realized that many of the people I looked up to and admired were investing in their closets. They worked very hard sometimes night and day to buy things, but failed to invest in things that would one day provide a reasonable return. They had closet wealth. Hundreds of shoes, literally. Tons of clothes, and nice cars. Frankly, there isn’t anything wrong with nice designer things, but all of your wealth shouldn’t be invested in your closet or a depreciating car. It was while I was in college that I resolved within myself to buy things I like, but at the same time invest in my future. Here are 10 baby steps you can take to help you invest in your future and not your closet.

  1. Clothes are a necessity, but buy them when there’s a good discount.  Buying clothes is more about quality than quantity. Invest in the essentials: white collar shirt, fitted black dress, flattering jeans, tailored black or gray pants, and 3/4 complementary sweaters and shirts to mix and match. Outside of these don’t pay a lot and never pay full price.
  2. Don’t impulse shop. Sometimes I laugh and ask myself, is this a need or a want? Would I rather have the money or the item I see? How many times do I think I will wear this? How many times will I be able to use this particular item? If my answers are on the fence I know that I need to say “No” and keep moving on.
  3. Know your money. Know what is goes out and coming in. Save and tally your receipts so that you see how much you are spending within a month on things you really don’t need, you may feel compelled to change your habits.
  4. Make a list and follow it strictly. Once a week or before you buy anything make a list of what is needed and don’t deviant from what is printed.  Stay focused and see if there are any coupons available for the items on your list that need to be purchased.
  5. Be accountable.  Sometimes we need help from someone else to rid ourselves from shopaholic tendencies. It does not matter who you are accountable to, but make sure it is someone you love and trust, someone that is understanding and that has your best interest at hand.
  6. Pay your bills before you feed your indulgences. After you have paid your obligations, then you can consider buying something else.
  7. Set concrete financial goals that are achievable. Your goals should be ranked: small, medium, and large.  Small goals are easy for you to fulfill and see results, achieving them will motivate you to accomplish your medium and large goals as well.
  8. SAVE. The are many ways to do it, but you need to find what works for you and your wallet or purse.  If you receive a bonus check, save some and pay off your debts. If you work for a company that matches retirement savings, rejoice for the free money and contribute all you can within reason.
  9. Turn your closet into actual wealth. Do an inventory of things that you no longer want and either donate, sell, or give them to someone who needs them. Many nonprofit charities take clothes to sell and will give you a tax deductible receipt.
  10. Be realistic. Be honest with yourself about your financial history and habits. Sometimes you have to know what you are doing before you can see the benefit of changing.

I am not a financial advisor, just a woman that hates struggling and debt. I also want to see those I love no longer bound by their closet wealth chains.

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