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How to save money for luxury items

Are you thinking about buying a luxury item but not sure how? Our guide on how to save for luxury items can help point you in the right direction. We have helpful hints and tips on the best way to buy expensive goods that you previously thought were beyond your means.

How to save money for luxury items
Rachel Lee
· 11 min read

Spending money on luxury items should become easier the older you get. Many of the monthly expenses you have always had start to reduce or disappear. You may have paid off your mortgage, for example, or your children may have left home, freeing up spare cash. That does not mean that luxury items are always immediately affordable to you, though. In some instances, you may need to save up to buy them. In those cases, how do you save money most efficiently?

Here, in our guide to how to save money for luxury items, we answer that question. We also explore what luxury items are suitable investments and how to buy cheap luxury items too. Finally, we also examine whether you even should buy luxury items - even when you can.

How do I save up for luxury items?

There are several ways that you can help yourself save up for luxury items. Depending on your circumstances, some methods may be more suitable for you than others.

Use savings accounts

Putting money aside slowly but surely into savings accounts is a good idea when trying to save up for anything - be it a holiday, housing renovations or something exceptionally frivolous. The reason being is that using a savings account means your money earns money. The result is you have to put aside less of your income to save up for that luxury purchase. Some savings accounts will be more suited to saving in the short term than others, however. Depending on when you want to make your final buy will have a significant bearing on what savings account you can open. Some savings accounts will penalise account holders for withdrawing money if it is within a set timeframe.

Use financing

You can buy many luxury items through a financing agreement that the seller sets up; a classic example would be a car. Many cars can be leased or purchased through a hire purchase agreement. It means you get to use the item you want to buy immediately while slowly paying off what you owe. There are drawbacks to this, however. For example, you may end up paying a lot more for that item. Additionally, you do not own the item until you have paid off the financing agreement in full. So, if you wanted to make modifications to a fancy new car, you wouldn't be able to until you make the final payment.

Make small savings elsewhere

To pay off a finance agreement quicker or put more into savings accounts, it can be beneficial to make small savings elsewhere. So, if you like to buy a cup of coffee on the way to work each morning, why not try just buying it on a Friday morning. Or, if you like to eat out a lot, try minimising the frequency you do so. Cutting back on one or two meals out a month can quickly add up. If you funnel those funds back into savings or paying off your loan, you will be surprised at how quickly it makes a difference.

Cashback

If you are thinking of getting a credit card and looking to save up for a luxury item, it may be an idea to look at a cashback card. Some credit cards reward their customers by giving them set amounts of money back on their spending each month. That can add up to a substantial sum of money over a year. Plus, if you use that credit card to buy the luxury item, you'll be lowering the price overall too.

What luxury items are good investments?

If you are looking to buy luxury items to protect your money, some are better investments than others. However, it's almost impossible to say precisely what luxury items are good investments - as all investments can go up or down. Yet, there are several factors you can consider when trying to make a luxury item purchase that is a good investment in the long term. If, of course, you are looking to protect your money at all. You may simply be looking at buying a luxury item for the sheer enjoyment of it - whatever it is. 

Look for items that historically hold value

Some luxury items may hold their value better than others. For example, some classic cars have been historically seen to either be worth the same, if not more, over the years. Compare that to some luxury cars that depreciate by a vast amount the moment you drive off the forecourt. Some luxury items are more prone to depreciation than others.

Look for quality

Buying quality luxury items is an excellent way to make a supposedly safer investment than buying expensive items whose quality is yet to be seen. Doing extensive research into items that actually stay working is fundamental if you want your luxury item to remain luxury. They also need to stay looking great too for them to be an attractive prospect to buyers further down the line.

How can I buy cheap luxury items?

Whether you are looking for a luxury item for personal usage or as an investment (or both), it is always beneficial to buy it as cheaply as possible. Even if you have all the money in the world, buying the same product at a higher price is the definition of a waste of money. So, how can you help yourself buy cheap luxury items? Or, how can you buy your lusted after luxury item for as low a price as possible?

Use eBay or Facebook marketplace

Buying second hand is always an option when purchasing many goods. That's even more so the case for luxury items, particularly watches, handbags, and cars. Different types of products can have specialist second-hand websites, but generalist websites are always worth a look. eBay and Facebook marketplace are obvious examples. Plus, you can pick up some fantastic bargains if, of course, you are happy for your luxury item to be second hand. Buying second hand is not for everyone.

Shop around

So what should you do if buying second hand isn't an option for you? Without a doubt, buying second hand will be a cheaper way of buying your luxury item, but you can get the lowest price if you shop around. Again, on top of researching the best version of your wanted item, researching where to buy it is critical. Some shops will simply add a premium onto their goods because of overheads or the shop itself being a highly reputable brand. But, the internet does provide a fantastic way to level the playing field. Golf clubs are a great example of this. As long as you buy the same golf club from the same manufacturer, does it matter what outlet you eventually buy it from? Bearing this in mind, if you are splurging on a luxury item - for investment purposes or not - do not be tempted to panic buy. Take the time to look into the cheapest seller instead.

Haggle

Buying a luxury item does not mean you necessarily have to pay the advertised price. Do not be afraid to contact the seller and see what the best price they can offer is. The worst that could happen is they can say no, and you still have to pay full price for an item you wanted anyway. The best thing that can happen is that you pay less for something you had lusted over for a while.

Buy past season goods

Buying past season goods is an easy way to buy a luxury item. Take, for example, Apple iPhones. These handsets depreciate massively the moment a newer version comes out. Plus, even designer clothing brands have end of season sales like the typical department store does each Christmas.

And now, thanks to the internet, accessing outlets to buy a wide range of past season goods from is very easy. Many clothing websites will have an 'outlet' or 'sale' page throughout the year. It means you can often buy items at a materially reduced price than what it was originally marketed for. Or, there are websites like The Outnet that are full price websites' dedicated sale sites. The Outnet, the outlet site of Net A Porte, offers some clothes at up to 80% off the RRP, which is obviously a massive saving.

Website codes

Holding out for a promotion code for a website can be a great option for those that do not need a luxury item immediately. Plus, a lot of websites will send you a promotion code quite quickly if you leave something in your basket for a while. It may not always be a huge discount, but many will offer 10-20% off. Given that luxury items often have a high price point, even 10-20% off can add up to a lot of money.

Should you buy luxury items?

Of course, after a lifetime of putting kids first or trying to save money to pay off the mortgage or car loan, it can feel a little alien to buy a luxury item. But why is that? Should you buy luxury items, therefore, if you are hesitant initially? The answer is purely down to you and your circumstances. However, using the following criteria can help if you are having a crisis of confidence over whether to buy a luxury item or not.

Can you afford to?

Perhaps one of the crucial questions to ask yourself throughout your purchasing process is whether you can afford it. Only you can answer this - you need to balance it off your recurring monthly expenses and income.

Do you need it?

If you can afford it, ask yourself if you need it. Many luxury items are sometimes seen as superfluous to need. But that is not necessarily always the case. Just because there are cheaper versions, it does not mean you do not need the item in the first place. Plus, if your luxury item holds its value better so that you can sell it at some point, it can make sense to buy it over a cheaper product.

Saving money to buy luxury items

When you are nearing retirement or currently drawing a pension, there is a fine balance to be had. You need to ensure that you do not spend more than you can afford, but also your retirement is a time to have a fun. If that means buying a luxury item that has always seemed a bit frivlous beforehand, then so be it. As long as it does not materially affect your standard of living, then your retirement is arguably one of the best times to indulge.

Frequently asked questions about saving to buy luxury items

What is a luxury item?

A luxury item is often a more expensive version of goods that are available on the market. They are usually seen to be reserved for the very rich. They are also usually often assumed to be better quality. However, that is not always the case as the idea of luxury can often be perpetuated by clever marketing and branding.

What luxury items are worth more in the future?

Knowing what items will be worth more in the future is not an exact science. However, items such as art, jewelry and classic cars are often seen to hold their value so that you can expect to at least get your original investment back.

What luxury items depreciate the most?

Some luxury items will depreciate more quickly than others. Cars can be a good example - especially ones that have a lot of miles on the clock. Clothes will often sell at a lower price than their original cost, though leather goods can often retain value. 

Rachel Lee
Rachel Lee
Having worked at Morgan Stanley and BNYMellon for over 10 years in pensions and investments, Rachel naturally started to move towards investment writing more and more in her day job. Rachel now works as a full-time business and financial writer - drawing from her hands-on experience in the field.
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