7 Expensive Purchases the Middle Class Should Avoid

Getting swept away with spending happens to the best of us. Whether you’re upgrading to the latest cell phone or a new car, it’s easy to forget about the bigger picture when it comes to our finances.

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According to experts, though, this is a big no-no, and there are certain expensive purchases you should avoid at all costs — especially if you’re part of the middle class.

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Overpriced Tech Gadgets

“Constantly chasing the latest and most expensive tech gadgets can be financially draining,” said Alan Beard, financial expert and managing director and CEO of Interlink Capital Strategies. He noted it’s essential to evaluate whether the latest technology truly provides substantial benefits for your specific needs.

“It’s not mandatory to grab the newest iPhone model each time!” urged Jonathan Merry, finance expert at Moneyzine. “Unfortunately, a prevalent notion among many in the middle class is that acquiring the latest gadgets annually is a wise economic choice. It’s not!”

Merry added that regularly upgrading is financially impractical because technological devices, especially smartphones, lose value incredibly fast. “Most of the time, the changes between models are minimal and hardly warrant the extravagant costs,” he explained, noting that this relentless pursuit of the newest releases leads to unnecessary expenses, pulling money away from potentially more beneficial financial objectives.

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Expensive Housing

“Everyone dreams of a cozy home in a nice area,” said Merry. “Yet, housing prices have been racing ahead of incomes globally, making this dream hard to achieve.”

Many middle-class families find a major part of their earnings going into their homes through mortgages, rents and upkeep. By spending excessively, they end up being what Merry calls “house poor.” “This term describes folks who pour so much money into their homes that they struggle to afford other financial commitments or savings.”

Brand New (Luxury) Cars

“I know getting a brand-new car is thrilling,” Merry highlighted. “You’re drawn in by the sparkling exterior, untouched interior, advanced tech, and the unique scent only a new car has. But, it’s a surefire way to watch your money vanish,” he said.

He explained that middle-class people need to avoid springing for a high-end and luxurious model just because they qualify for financing. “It’s crucial that your monthly payments don’t wreck your budget.”

If possible, Merry recommends purchasing a used car instead, which means you’re covering the vehicle’s price, sales tax and registration fees. “It’s smarter to go for a used car, ideally one about three years old,” he added. “By then, the car won’t depreciate more than it already has, with the first owner absorbing the most substantial cost reduction, sparing you the financial brunt.”

Extended Warranties on Low-Cost Items

Purchasing extended warranties on low-cost items may not be cost-effective, explained Beard. “Many budget electronics and small appliances are relatively inexpensive to replace or repair,” he said. “Instead, assess the product’s durability and reliability, and consider whether the warranty truly provides value.”

He suggests saving the money you’d spend on extended warranties and putting it into an emergency fund or toward more significant purchases that genuinely require protection.

Excessive Home Improvements

Home upgrades are popular among the middle class, but many might go too far, continuously renovating their home without consideration for their money, said Carl Jensen, personal finance expert and founder of Compare Banks. He noted that this can place a burden on your budget, which can be prevented by establishing a clear restoration budget and prioritizing tasks.

Expensive Vacations

Spending a significant portion of your income on an expensive vacation can strain your finances and limit your ability to meet other important financial goals.

“Vacations are important for relaxation and recreation, but they should not put you in debt,” said Sherman Standberry, licensed CPA and managing partner at My CPA Coach. Instead, he suggested considering budget-friendly travel options and always choosing to save up for vacations instead of putting them on credit — as this can have long-term negative effects on your financial stability and credit score.

Costly Higher Education

While the decision to spend money on expensive higher education is a personal one, there is no one-size-fits-all answer. That said, it’s important to do a cost-benefit analysis, as higher education can be a significant financial investment, and you should also assess whether the potential return on investment justifies the cost.

“Pursuing higher education is a commendable goal, but it’s crucial to consider the return on investment,” said Standberry. “Community colleges, trade schools, or online courses may be more cost-effective.” These options can also provide specific skills and training that are in demand in the job market.

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This article originally appeared on GOBankingRates.com: 7 Expensive Purchases the Middle Class Should Avoid