Personal Finance & Money Stack Exchange is a question and answer site for people who want to be financially literate. It only takes a minute to sign up.
Sign up to join this community
How can I responsibly save for a non-necessity purchase?
I'd like to buy a PlayStation 4. As you may know, I can't eat or live in said PS4.
Buying something that is more than a week's worth of pay seems irresponsible, but that doesn't stop me from wanting one.
How can I responsibly save for a PS4 while also taking into account all of my other financial short- and long-term goals?
Total income - mandatory spending (ie bills) = discretionary income.
Make a budget and calculate how much discretionary income you have each pay period. Save some fraction of your discretionary income towards this purchase. Pull the trigger when you have enough saved.
By thinking this way, you ensure that the PS is robbing from movies, dining out, booze, etc instead of taking from rent money or the electric bill. Do not use debt to make this purchase.
It would be wise to put off this purchase until you have a solid emergency cash reserve that can sustain you if life throws you a curve ball. You should also make sure to eliminate any bad debt, like credit card debt, before splurging on a new gaming console.
The same as you would save for anything else, buget and make sure your expenses are less than your income each week. Put away a little each week for the item you want to buy, and when you have saved up enough for the item you can buy it.
In the mean time whilst you are saving for it, you can shop around to see where you can buy it at the lowest price.
Your question is rather direct, but I think there is some underlying issues that are worth addressing.
One
How to save and purchase ~$500 worth items
This one is the easy one, since we confront it often enough.
Never, ever, ever buy anything on credit. The only exception might be your first house, but that's it.
Simply redirect the money you would spend in non necessities ('Pleasure and entertainment') to your big purchase fund (the PS4, in this case). When you get the target amount, simply purchase it.
When you get your salary use it to pay for the monthly actual necessities (rent, groceries, etc) and go through the list. The money flow should be like this:
Two
How to evaluate if a purchase is appropriate
It seems that you may be reluctant to spend a rather chunky amount of money on a single item. Let me try to assuage you.
'Expensive' is not defined by price alone, but by utility. To compare the price of items you should take into account their utility.
Let's compare your prized PS4 to a soda can.
Is a soda can expensive? It quenches your thirst and fills you with sugar. Tap water will take your thirst away, without damaging your health, and for a fraction of the price. So, yes, soda is ridiculously expensive, whenever water is available.
Is a game console expensive? Sure. But it all boils down to how much do you end up using it. If you are sure you will end up playing for years to come, then it's probably good value for your money.
An example of wrongly spent money on entertainment: My friends and I went to the cinema to see a movie without checking the reviews beforehand.
It was so awful that it hurt, even with the discount price we got. Ultimately, we all ended up remembering that time and laughing about how wrong it went. So it was somehow, well spent, since I got a nice memory from that evening.
A purchase is appropriate if you get your money's worth of utility/pleasure.
Three
Console and computer gaming, and commendation of the latter
There are few arguments for buying a console instead of upgrading your current computer (if needed) except for playing console exclusives. It seems unlikely that a handful of exclusive games can justify purchasing a non upgradeable platform unless you can actually get many hours from said games.
Previous arguments to prefer consoles instead of computers are that they work out of the box, capability to easily connect to the tv, controller support... have been superseded by now. Besides, pc games can usually be acquired for a lower price through frequent sales.
In the course of one's spending, it's not tough to find things that are going to be that expensive. A median income is in the $50K range in the US. The diamond folk advertise that one should spend 3 month's salary on an engagement ring. Even with a decent income, I spent zero. My wife was practical, not interested in jewelry, and wanted a big house. The money went to the downpayment. The house cost 2.5 years salary at that time.
A car, even used, will cost some month's salary.
If that $50K earner is saving, has an emergency account, and is on track with their financial long term goals, a week's pay can buy a nice sized TV.
A nice vacation can cost a week's pay to a month's pay.
Your question is great, although it shows a concern that's typical very early on in one's career. There are related question here about "how can I spend more?" They tend to come from someone living on a student budget that now has an adult's income from a desirable job. The answer is to sit down, list your monthly spending, properly budget a decent portion for savings, and see how much you have for frivolous spending. Keep in mind, it's easier to sock it away now. No house, no kids, etc. When we were first married, we lived on my wife's income (in effect) and socked mine away. The house tightened the budget, as did the kid.
In the end, the PS4 is less about the $400 than it is about the rest of your finances.
