[USER]

When do you feel comfortable spending a large amount of money when it’s under ten percent of your networth?

Both my husband and I are savers and not big spenders.

We have been fortunate to receive inheritance that makes up a big majority of our networth which is about 4 million including home, retirement accounts and majority in a brokerage account (big allocation is in apple that we inherited).

We are seriously considering adding on to our home but the estimates are much higher than anticipated 300-350k.

This is definitely not a NEED but we would for sure enjoy the extra bedrooms for our kids, office space, dump zone for our large family etc.

Moving is not an option for us.

We are just hesitant to spend so much.

I guess it’s finding the balance of saving for the future and the die with zero mentality…

any advice on when it’s ok to splurge?

[Heather]

When you can afford it and it will improve your quality of life. Without truly negatively affecting your net worth.

Improving your home will add value to it.

[Carrie]

So for me I figure out how many years it would take me to get back to the number I’m at.

So say 3.7 million x .04% = 148,000. So it’s 2-3 years of earnings to get back to 4 million.

Usually that helps me decide if it worth it.

My guess is it probably is for you since you will have an improvement to your family life & most likely your house will go up in value so you will just be trading one asset for another depending on finishes and expected housing values in your area.

[Casandra]

My husband and I are having that same discussion right now with vehicles.

We crossed that big goal line for net worth and we just can’t bring ourselves to purchase newer vehicles.

I think as long as your not putting yourselves in debt, and the purchase doesn’t set you back in terms of goals, then I’d say go for it.

[Katie]

It sounds like you certainly can afford it. The only thing I would suggest is to speak to a realtor about whether or not the investment you plan to make in the home will be returned through increase in value.

[Jessica]

We are doing this right now and it’s painful and also very gratifying, our home value will increase considerably and our family will have a great place to live while our kids grow.

[Suzanne]

Consider the higher property taxes, utility bills, and insurance that will come with a larger house (it will undoubtedly add up to thousands more each year).

But if you have a plan to handle the extra ongoing expenses and are debt free… then absolutely you should go for it.

If not, there’s a middle ground between “spend $350k” and doing nothing.

Reduce the scope of the home addition until it fits what you initially budgeted – fewer square feet, pocket office, etc.

[Diana]

You need to feel comfortable to splurge – a number or % of net worth won’t get you there.

It is a mindset shift, get in touch with the feeling you will have by adding this addition.

When you are able to embrace what you are getting by giving up this number in your bank account, you are ready.

[Leslie]

I was in a similar situation a few years ago. I spent a large amount on home renovations…

nothing that was necessary, all cosmetic.

Pulling the trigger initially made me queasy, but the joy it has brought me was worth every penny.

I’ve now replenished those funds and live in my dream home.

I say go for it

[Caro]

Based on what I’m hearing, I would do it. I don’t have any nitty gritty specific advice but I’d definitely continue down the information gathering path.

[张扬]

Most people are too comfortable with spending money. If you want to be smart about finances, then you should feel uncomfortable with the idea of spending a significant % of your net worth on one item or splurge.

That means your brain is telling you to carefully examine the expense to ensure it will add enough value to your life to justify giving up the opportunity cost of that money.

Once you’ve given it thorough consideration and still feel it’s worth the trade-off, then it’s probably ok to proceed.

That’s what being intentional with money is all about.

[Paula]

Get an opinion of home value as is and as renovated. Subtract that difference from the 350k and that’s what you’re “really spending”

[Sara]

If it improves your quality of life, it is absolutely worth it. I’m doing it now too but building a home from scratch.

We are almost done and I couldn’t be happier.

Congrats and good luck!

[Kristin]

If I passed down a generous amount of money to a loved one, I would hope they would use it to make their lives better and easier.

Without knowing much else about your financial situation, I say go for it.

If you still have kids at home, that money has time to regrow and you have plenty of years to enjoy your better fitting home.

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