A client once rang me to ask whether buying a particular car would be a waste of money.
We talked about the likely resale value because that was the frame he had put around the decision. But in truth, resale value is rarely the right way to decide whether to buy a car.
And as the saying goes, if you have to ask how many miles a Ferrari does to the gallon, you probably can’t afford one.
Most cars are poor investments. They depreciate, they cost money to run, and almost nobody buys one because they expect it to outperform a global equity portfolio.
But that does not mean buying a car is automatically wasteful.
This is where financial planning can become too narrow. If every purchase is judged purely by whether it preserves capital, then almost everything enjoyable begins to look suspect.
Holidays become wasteful. Restaurants become wasteful. Helping a friend becomes wasteful. Upgrading your home becomes wasteful. Even paying someone to solve a problem you could technically solve yourself becomes wasteful.
That cannot be right.
The purpose of money is not merely to accumulate more money. The purpose of money is to improve life.
The harder question is how to know whether a purchase will actually do that.
There is a moral tone that can creep into conversations about money.
Saving is seen as virtuous. Spending is seen as indulgent. The person who keeps accumulating is assumed to be sensible. The person who spends is assumed to be less disciplined.
Sometimes that is true. Often it is not.
If someone has no financial resilience and is spending in a way that creates long-term vulnerability, then we should probably call that what it is: reckless.
But if someone has built a proper plan, understands what they need for financial independence, has allowed for later life, and still has surplus wealth, then spending is not the enemy.
In that position, the better question is not: “Is this wasteful?”
The better question is: “Will this purchase genuinely improve my life?”
That sounds simple, but it is a much more demanding test.
When deciding whether something is a waste of money, I think there are five useful questions.
With a proper financial plan, the answering these questions becomes easier.
If your WealthMap shows that your long-term position is secure, that you have allowed for the major risks, and that you have surplus capital or income beyond what you need, then the money has permission to serve a purpose.
That does not mean you should spend it carelessly.
It means you can spend it deliberately.
The best financial planning is not about saying no to everything. It is about knowing what you can say yes to.
So when is spending money a waste?
It is wasteful when it does not improve your life, reflect your values, solve a problem, support someone you care about or move you closer to the person you want to become.
It is wasteful when it is bought for an imaginary version of yourself who will never quite appear.
But it is not wasteful simply because it depreciates, because it is enjoyable or because someone else would not have bought it.
Money is not a museum piece. It is a tool.
And used well, it can buy far more than things. It can buy time, freedom, health, memories, generosity, confidence and relief.
The point is not to spend less.
The point is to spend better.
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