Take the High Low Approach to Your Spending
Are you familiar with the High Low motion offense on the hardwood? The Golden Gophers employed it masterfully earlier this year to take advantage of Jordan Murphy’s talents, defeating Purdue twice down the stretch and Louisville in the NCAA tournament.
For better or worse, this post has nothing to do with that high low approach. It was fun to watch, though, at least it was for me!
The high low approach, as described by guest author Dr. Barbara Hamilton, the interventional radiologist behind the Tired Superheroine, won’t score points on the basketball court. But apparently, it’s a popular approach to affordable fashion, and using a similar strategy with your finances can lead to great results, as well.
I met the good doctor in Washington, D.C. at the 2019 version of FinCon. Afterward, I asked the rather large physician contingent if any of them would be interested in submitting a guest post.
The young, scrappy and hungry Dr. Hamilton jumped at the opportunity. She was not throwing away her shot.
I promised her a plethora of new visitors to her excellent blog, which focuses on being a professional and a mother, and striking a comfortable work-life balance. Check out the Tired Superheroine just as soon as you’ve read her full post here!
Take the High Low Approach to Your Spending
What is the high low approach?
According to Audree Lopez of Stylecaster, a popular lifestyle and fashion blog, “Mixing high-end designer duds with fast-fashion affordable items is a secret weapon for every fashionista who’s on a budget.”
In the fashion world, making an ensemble from a combination of high-end and basic pieces is referred to as high low style. Aside from increasing the affordability of one’s look, the high low approach helps one avoid looking like they’re trying too hard.
This style strategy can be summed up as “Save here, splurge there.” You can apply the high low philosophy to your financial life to help you enjoy your money while reaching your financial goals. I’ll explain.
High low spending: Why try it?
Lifestyle inflation can be insidious for high income professionals. During training, money is a finite resource. You scrimp where you can, and consider purchases carefully. Suddenly, your paycheck jumps to an attending level, and you think you can level up on anything you buy.
Or maybe your family — or that little voice in the back of your head — considers a new purchase or premium cable subscription and says, “Why not? We make multiple six figures now!”
If you truly feel the cable package is an investment in time with your family, then it may be worthwhile. On the other hand, alternatives could include choosing a few streaming services to suit your programming needs, and spending the rest on going out for mini-golf.
As high-income professionals, we run the risk of thinking we should be able to afford everything, and that we don’t have the time or bandwidth to consider any other way. But some intentionality can go a long way.
Resist the urge to upgrade across the board. As the wise financial blogger and podcaster Paula Pant says, “You can afford anything, but you can’t afford everything.”
The risk of spending “high”
Automatically choosing the upgrade can feel easier in the moment. We work so hard — why “suffer” in coach? Well, flying coach could mean the difference between comfortably taking a three week vacation instead of two.
Sometimes, choosing the “high” option can be a product of limiting beliefs: You think you won’t enjoy a vacation with your in-laws unless you have the nicer room and the full spa package.
Maybe you think your kids will get bored unless you’re at an all-inclusive, when it’s possible they may have a truer experience outside the walls of a resort.
Sometimes, adding luxuries can distract, instead of adding to the experience. You arrive at your suite and the champagne isn’t chilled? You’re on the phone with the front desk instead of enjoying the view from the balcony.
Another risk of purchasing “high” all the time is the momentum it creates. If you buy a sleek new Tesla, you might feel you need a new wardrobe to match. Suddenly your old suitcase looks really sad when placed in the trunk, so you replace it.
The new car might look out of place parked in front of your modest home, so you start dreaming of an upgrade. One luxury purchase can drive the next if you’re not mindful about it.
How to reintroduce “low” spending
Many of us remember the lean or downright poor years of medical school and residency. Who wants to remember that?! Well, reflecting on, and even taking inspiration from those years can help accelerate your money goals, while reminding you of how far you’ve come.
In training, I had a default lunch of peanut butter and jelly on wheat, which I made assembly-line style, and stacked in my freezer. The sandwiches thawed by noon conference, saving me oodles of time and money.
Back then, $7 for lunch at Au Bon Pain was a splurge. Now, feeding my family of three for less than ten dollars is a win. A high low approach to dinner these days could mean steak some nights, with meatless dishes or breakfast-for-dinner other nights.
Just because my salary is in a top percentile doesn’t mean I have to spend a commensurate amount on food.
Remember free stuff? As a student or trainee, there was no shame in seeking free food, or free anything, for that matter. If I found leftover food from an event, I’d hit the jackpot.
Later, as an attending, when I was offered a carload of used baby gear, I delightedly accepted. Not only were my friends happy to share their (and their friends’) stuff, but it helped clear their storage space. We saved hundreds of dollars and kept many baby items out of the landfill by passing them along to the next user when we were done with them.
Spend Low: Draw inspiration from other lifestyles
One of my best travel memories is flying to Oahu for the first time, just because fares were good. I planned the trip with girlfriends and kept my plans when they backed out.
Flying solo, I stayed at a hostel, sharing a room with people I’ve never met before. Taking risks like these led to an adventurous week, filled with kite surfing lessons, new friends, local events and parties.
Accompanied by like-minded travelers, could you incorporate the high low concept into your own experiences? Grittier elements can be juxtaposed with luxury, making for a richer experience.
Instead of using the whole budget on an all-inclusive resort, you could book an Airbnb ($40 off your first stay) and a cooking lesson from a private chef. Instead of choosing the most popular excursion on TripAdvisor, you could hire a guide for a personalized adventure. The beauty of the high low approach is that you choose where to allocate money, based on what matters most to you.
When to go “high”
On The Well-Dressed Life blog, Megan Kristel prompts: “What are the five items you wear all the time? For me, it’s jeans, a blazer, a dress, pumps, and boots.”
She recommends investing in quality items that will see the most use. In turn, you can apply this concept to other areas of your spending, like experiences. A big-ticket trip with extended family, for instance, will add richness to your life for as long as you and your companions can remember it. That’s money well-spent.
The wear-all-the-time concept can apply to the bigger purchases as well. If you take a ton of home call, you may prioritize living near the hospital, even if it costs more.
I intentionally bought a house that cost more based on location, in order to live within ten minutes of the hospital. If you host frequent overnight guests, a bigger home might be a worthy spend.
If, on the other hand, your home budget is based on what the lender says you can afford, you might later regret the jumbo mortgage and the higher cost of upkeep.
Cornerstone pieces: go for versatility
Just as you might hesitate to buy an expensive black vinyl jacket, the high low approach to spending favors spending on classics that will get more mileage, like the classic trench. The timeless, more versatile option will take you from work to a wedding in the countryside, whereas the flashier jacket will see more limited wear.
This might be compared to a two-seater sports car, which limits transportation options if you’re a family of four. A comparable spend on a more versatile car might be a better move. This is why long-lasting or versatile items can occupy a bigger slice of the budget.
Be like a fashion blogger and combine high with low. It might just supercharge your savings and your lifestyle.
[PoF: Thank you, Dr. Hamilton! To a spendthrift, your high low approach to personal finance may seem like the world turned upside down, but I think it makes perfect sense.
For example, we have a second home that we love, but rarely indulge in fine dining and have never owned luxury cars. We don’t drink wines described as exquisite, but we will pay a little extra for a stellar craft beer.
If you’d like to read more from the good doctor and mother, head on over to the Tired Superheroine for more great money and life tips!]
What is your “high” item? Where do you go low? Tell us how you use this approach to spending below!