On the face of it you can, because there’s the money in the bank that’s maybe not doing much. After all, the bank is paying you 0.00001% on your deposit account, you don’t understand the stock market so there’s no point risking it there because you could lose a lot more than whatever you’ve seen in the shop will cost you. Why not treat yourself?
Honestly, if you don’t have a financial plan, you’ve absolutely no idea if you can afford that new thing or not! Absolutely none!You want to have a certain amount of money and assets by a certain age. I would suggest at least $1M by the age of 50 including your house, pension plans and whatever as a minimum. For a couple, it’s at least $1.5M.
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If you’re 25 years old, you need to be socking away $500 every month for the first year. The next year, $600 a month. The year after that, $700 a month, and so on, increasing your savings rate by $100 per month every year. If your savings grow at 7.5% a year, you’ll be a millionaire by 50. Just! And you’ll probably have to pay some taxes along the way on your investments…
Anyway, let’s assume for the moment that you’re saving in line with this plan and that you’ve been following it religiously for the last 3 years. This means at the age of 28, you should have about $25,000 in the bank or in assets, at the age of 40, you should have about $350,000 in the bank or in assets. Even this is the absolute minimum and unexpected things can happen along the way like being unemployed for a few months which might eat into your savings and prevent you from adding to them during this period.