Should you skimp . . . or splurge?

Some purchases should last a lifetime; others don't need to survive a summer trend. Here is how to choose between cheap and steep.
By Emma Johnson, MSN Money

In my hall closet are around 10 coats and jackets. On one end of the spectrum is a meadow-green coat of indeterminate fabric that I picked up at H&M a couple of years ago for, if I remember, $59.

On the other end is a black cashmere classic I inherited from my mom, who bought it about 35 years ago at the Marshall Field's department store in Chicago. She paid $280 for it -- the equivalent of two payments on her burnt-orange Plymouth Duster. At the time she was supporting herself on a fifth-grade teacher's salary of $8,000 per year.

What makes a good coat?

Despite similar styles -- button front, knee length, cinched waist -- the two coats couldn't be more different. While the green one is already nappy, slouchy and yearning to be retired to Goodwill, its black sister is still soft and gorgeous. It looks as though I bought it at a high-end department store recently for, let's say, $1,346 -- what $280 would be today, adjusted for inflation.

The difference between my mother's generation and my own hangs in that closet. In a relatively short amount of time, experts have watched our nation swap the practice of investing in quality, long-lasting merchandise for the consumption of large quantities of mass-produced, highly designed merchandise.

"Something you use every day"

Part of the issue is in the market itself, with the spread of mass production and wide availability of consumer credit. But consumers are also less knowledgeable, explains Paco Underhill, president and CEO of market research consultancy Envirosell and author of "Why We Buy: The Science of Shopping."

Americans in their 20s and 30s are now at least one generation removed from the era of homemade clothing and hand-crafted wood furniture, Underhill says. "In the 1950s, 90% of homes had sewing machines, which means women knew something about how clothes were put together. They could look at something in the store and tell if was of good construction or crappy construction," he says. "In my office, I don't know anyone who has bought a custom suit. They don't know the difference between off-the-rack and custom."

How good is this table?

You don't have to buy quality all the time -- and probably can't afford to -- but it's important to know when to shell out for the good stuff. A few examples of times to skimp -- or splurge:

  • Mattress: SPLURGE. You sit, sleep and God knows what else on this item. Get a good one.

  • Men's dress shirt: SKIMP. If your suit is well-tailored and the tie spectacular, the shirt will be an afterthought.

  • Chef's knife: SPLURGE. One 8-inch chef's knife is all you need.

Why a chef's knife is so important

  • Women's shirts: SKIMP. Cute tops from H&M will go out of style before they fall apart.

  • Overcoat: SPLURGE. First impressions mean a lot.

  • Accent chair: SKIMP. If it's cool and rarely supports a rear, quality can come after design.

  • Table linens: SKIMP. Choose inexpensive table cloths and napkins to keep your tabletop trendy.

Slide show: A time to splurge

How did this happen? How did we lose track of the value of quality things -- objects that hold the promise of decades of use and beauty -- and come to view all the possessions in our lives as disposable?

Quality work or cheap junk?

Daniel Nissanoff, online retail entrepreneur and author of "FutureShop: How the New Auction Culture Will Revolutionize the Way We Buy, Sell and Get the Things We Really Want," says today's consumer culture actually bucks the mindset that brought us here.

"As human beings we've been socialized to buy and save," Nissanoff says. "In times not as prosperous as today, when we didn't know where our next food or source of supplies would come from, our ancestors bought things with the notion of holding on to them for as long as they could and then passing them on to the next generation."

In essence: Our forefathers were poorer than we are, and yet they had better stuff, relatively speaking.

But appreciation for quality craftsmanship has been swept aside by freely available consumer credit and high-end design on low-cost merchandise, says Dayana Yochim, personal finance writer at The Motley Fool.

"Credit cards let us instantly satisfy our retail desires," Yochim says. "Our grandparents had to delay that gratification. They figured that if they had to save for it, they'd better get the best they could. Now retailers want to catch that fleeting desire."

This trend has given birth to the "fast fashion" phenomenon, where retailers like H&M and Forever 21 sell runway rip-offs for pennies on the couture dollar, and consumers wear these garments for a single season before replacing them.

Similarly, Target, Ikea and Kmart offer budget designer furniture and other home furnishings with the look of more expensive makers, but quality that matches up better with the low price tags.

But now that we know how much a veneered, mass-produced bookshelf costs, it is easy for us to dismiss a pricier, handmade, solid-wood version as outrageous -- especially if you have never experienced fine furniture, Yochim says.

"All that information is telling us where to set the (price) bar," Yochim says. "We're looking at pricing before quality."

But so what? What is wrong with having lots of new, cool and inexpensive things all the time -- especially if we don't plan to keep them around that long, or expect them to last in the first place?

My friend John Rizzo, an economist, points out that you can buy a $1,050 winter coat today or a $70 coat every two years for the next 30 years. Say you get a fabulous coat today. Will you want that coat next year -- much less 20 years from now? What if you get fat, or hate the style, or feel like an idiot having your friends know you haven't bought a new jacket in two decades?

I recently asked my mom about that cashmere coat, and why she spent the money.

"You still have that?" she said. She was surprised, although not too much. "I guess I just thought I needed a good winter coat. I probably wore it for at least 10 years."

In winter months, I wear it at least once a week.

Published July 30, 2008