Why do you think Mercedes-Benz chose “The best or nothing” as their slogan? Can’t a Honda Civic get you from place to place without premium sound or a 577 horsepower engine? Of course. But Mercedes owners want more than functional transportation. They want an experience.
Here are a few examples of luxury from readers:
“A well-designed high-quality backpack. I spend a lot of time commuting on public transit, so having a bag where everything is easily accessible when you’re in a cramped space is crucial. I recently got a Peak Design backpack and I love it.”
“I spend $300 a pop on Allen Edmonds shoes (I own two pairs now). People freak out when I tell them what I paid. It’s such a luxury purchase that most of my friends and family can’t conceive of having $300 extra to spend on something as ‘frivolous’ as shoes. However, everyone comments on how nice they are and what it does for my overall appearance.”
“Paid thousands for an Eames lounge chair. Haven’t regretted it for a moment, and it automatically improves my day every time I sit in it. Worth every penny.”
“I spent $700 on a pair of boots over 7 years ago and at the time it was an insane luxury. I almost hyperventilated when I bought them, I felt irresponsible, I was anxious, and I LOVED THEM! … 7 years later I still have them and I still wear them and they’re still hot!! I still get compliments.”
Money Dial #9: Social status
Social status may at first seem a bit shallow—and sometimes it is! We remember back in high school when we were judged by the brand of clothing we wore.
But there can also be good reasons to value social status.
For example, a Rolex watch or Loro Piana sweater is functionally the same as something 1/100th the cost, but it signifies certain things about who’s wearing it.
Don’t laugh—most people scoff at status. But, these items convey a subtle status that can garner people “in” status because they say something about their income or personal taste or style.
Airlines, hotels, credit cards, retail stores, and others offer loyalty cards that can get you extra benefits—better rooms, higher cash back, free trips, and so on. Having a higher status can be worth thousands of dollars per year.
Here are a few other examples of what the social status Money Dial looks like:
“I was scheduled to have a vanilla wash and wax on Sunday, and instead I asked them what their highest level of service was. They told me they often prep cars for car shows or dealer rooms, everything from high-end exotics to antique cars, and can do everything from mirror shine polishes to full paint jobs. I ended up paying them just shy of $1,000 to do a full paint correction and a bunch of other stuff. Basically, 3 guys rubbed stuff on my car for about 8 hours. I don’t know exactly what all it entailed, but it looks badass and I feel like a badass.”
“Three months ago I signed up for a $159 monthly subscription to Rent the Runway, a designer clothing site that sends you 4 pieces at a time to keep for as long as you want.
I spend less time making decisions about what to wear, I feel and look better wearing well-made clothes, and I’m never bored with my closet. It feels a bit extravagant but it’s so worth it.”
“I bought a $1,500 tailored full-canvas construction suit made in the U.S. People say ‘You know how many suits I can buy for $1,500? Just buy off the rack and get alterations.’ It’s hard to buy suits in my size. The first time I wore a tailored suit, my VP at the time said, ‘Dude, you look like a model.’ I continue to get comments like that. With the above purchase, people assume you take yourself seriously and they, in turn, take you seriously. This is worth far more than a few grand.”
“I pay $450/year for a Chase Sapphire Reserve card that gets me airline lounge access for comfort and relaxation plus car rental status to get any car off the lot (from Corvettes to SUVs and I only pay for midsize).”
Money Dial #10: Self-improvement
There are several ways most people spend money on self-improvement:
- Take an online course (copywriting, social skills)
- Sign up for an in-person class (public speaking, dance)
- Hire a trainer at the gym
I’m a big reader (I try to read two books a week). In fact, I came up with “Ramit’s Book-Buying Rule”: If you think a book looks even remotely interesting, buy it. Don’t waste five seconds debating it.
If you glean just one idea from the book, it makes it worth the price. That idea could be the one that changes your life or simply challenges long-held beliefs you’ve always had. And those moments are invaluable to your development.
Another great way to think about self-improvement is called “The Hotshot Rule.” It comes from former Cinnabon president Kat Cole: Four times a year, Cole would go somewhere quiet, think about the state of the company, and ask herself, “Let’s say a hotshot takes over my job today. What two or three things would the hotshot look at and say, ‘That’s unacceptable’”?
I think that’s a great rule not only for business but also for every area of life. If someone else came in and looked at a certain aspect of my life—what food I eat, my relationships, my health—what would they say is unacceptable? When you identify those areas, you can focus on making changes.
Here are some examples from readers of how self-improvement is their Money Dial:
“Ski instruction. I do it every day we go. It has changed my abilities, and with greater abilities you get much better experiences (views, terrain, thrills, peace) on the mountains.”
“I spent $15k on a sales coach. Turned out to be the best investment I ever made. More than doubled my income in less than a year. Was promoted, then later headhunted for an incredible job. About 9 months later, work volunteered to start paying for it. New company I’ve joined sends the other managers to similar programs now. My only regret is not doing it sooner.”
“I love to spend money on improving my electric guitar skills by taking lessons from really good people. I recently had the chance to take lessons with the lead guitarist of an international touring heavy metal band from the Bay Area. I have looked up to these guys for years and my abilities have gone through the roof.”
What’s your Money Dial?
One thing you may have noticed is that several of these Money Dials overlap—some things we spend money on appear in two categories. For example, a Rolex can be both a luxury and provide social status. Or hiring a trainer can be for health/fitness and self-improvement.
That’s OK!
If something that you spend money on appears in two categories, see if you can quickly identify the primary category it belongs to. If it still isn’t clear, look at other things you spend on. Are they in one of those two Money Dials?
Once you identify your #1 Money Dial, it flows through your life and affects everything about how you spend your money. It’s your personal strategy. And the ways you spend your money are the tactics to implement that strategy. You are now the CEO of your life.
My favorite part of Money Dials: Once you recognize yours and accept it, you can zoom in on what you love by turning the dial all the way up, as I’ve done for myself for convenience.
This might seem extreme to some, but for me, it’s a complete no-brainer. Because I know my Money Dial and can focus on it, I actually free up time to invest in my company… and I can earn even more money as a result.
Ready to start splurging? You need to make sure your finances are in order first. Meet a couple whose spending on takeout is getting a little out of control.
