Do you know how much you should be spending on luxury? What does it mean to spend on luxury, exactly?
My friends Dror and Jesse have a rule for that and a way to help you define what luxury spending means.
If you play your cards right, you could end up with a very large luxury budget to support a fun and very comfortable fatFIRE lifestyle.
I separated between needs and wants/luxuries. I wanted to fully fund the necessities of life but limit the resources spent on luxuries.
The 1% Rule asks you to keep two sets of books—a schism in your budget. The first post covers all of the necessities of life. It has no upper limit in size. It grows to meet your needs. But spending on non-necessities from this pot is not allowed. The second pot covers all the luxuries in life.
It’s a subjective question. Is a steak dinner a luxury? What about a necklace for your spouse? Heck—what about a car? Mr. Money Mustache would probably call a car luxurious!