# Fashion Theory – How To Calculate Your Clothing Budget

I suggested to Aisha, a recent client, that she invest in a durable leather handbag. Aisha argued that she simply couldn't afford to spend upwards of \$ 300. The remarkable thing about this was that once we analyzed her recent clothing purchases we realized that she was spending about \$ 300 monthly on clothing! Aisha was actually suffering from sticker shock and had kind of become accustomed to buying quantity instead of quality. The end result was that her closet was essentially bursting at the seams with discount and poorly constructed clothing. In the end, Aisha was in effect spending \$ 3,600 annually (nearly 10% of her \$ 37,000 salary) on a wardrobe that lacked both function and style.

Establishing a budget is a very difficult question to answer from a general perspective because everyone's financial and clothing situation is different. If you have a job that allows you to work in a casual environment where some of your everyday clothing can be incorporated into you daily work outfits, I would estimate the overall clothing allowance to be somewhere around 7%. For those that work in a more professional office environment where you are expected to dress the part and dressing the part may overall affect your promotion-ability factor; I would estimate around 10% of your salary. Keep in mind, this budget should include the costs of alterations and professional cleaning services. It is also important to note that if you are maintaining a household on this salary, ie you have children or a spouse you must allocate a portion of this amount to their clothing allowance as well.

Example 1: Aisha works in a business casual environment. Her salary is \$ 37,000. Her clothing allowance is: \$ 2,590.
– Hey.
Example 2: Elaine works in a professional business environment. Her salary is \$ 85,000. Her clothing allowance is: \$ 8,500.

1. Invest in Investment Pieces: Investment pieces are just that – "investment" pieces! So, don't be afraid to spend a little more money on the classics which are required to create a functional wardrobe. Discount stores such as Marshalls, Century 21, and DSW could produce some very valuable finds, however it is important that you don't become distracted and divert from the standard classics when shopping at these stores. For classics, I recommend shopping at a formula store. A formula store is typically a specialty retail store that stocks key basics. Some great formula stores are Gap, Ann Taylor LOFT and The Limited. The great thing about a formula store is that once you find the sizes and styles that suit you best, you can shop there season to season with little difficulty. These are great stores for purchasing a classic a-line skirt, trousers, jeans, button-ups, and tees, tanks and camis of variety.

2. Don't Be a Label Whore: When it comes to beautiful dresses, handbags, shoes and scarves there are some designers that are simply ahead of the par, however to simply focus all of your efforts into collecting clothing that has a designer label tag regardless of how flattering or well-fitting the item is – is simply not a good option.

3. Do Apply The Cost-Per-Wear Concept: To get back to the example I gave previously of Aisha spending \$ 300 on a leather handbag. The leather handbag is an investment piece which can be carried for months or possibly years to come. If Aisha carried this handbag for just six months her cost per wear would be \$ 50. I discuss the Cost per Wear Concept in more detail in a recent post.

4. Don't Charge: I know to some people this may seem unthinkable; however I think whenever you shop with credit cards you are always tempted to get caught up in the emotional buzz of said item and go well over your budget. If you're carrying a lot of debt (particularly from past shopping activities) you really need to think long and hard about plunking 7-10% of your income towards clothing. A simple rule of thumb I often use is "Don't buy it unless you can afford to buy two." No, I'm not saying that you should buy two of everything; rather what I am suggesting is that every time you buy something, you take that same dollar amount and apply it towards paying off debt or towards savings. So in effect, that \$ 300 handbag will now cost you \$ 600; \$ 300 to purchase and another \$ 300 in savings or debt payment. The amount of your clothing budget should match or exceed the amount you are saving or applying towards debt repayment.

5. Make It Automatic: Now that you have established your clothing budget, the only sure fire way to stick to it is to make it automatic. Here are two great ideas for actually staying on budget.
Low Tech Option: If your budget allows for \$ 200 to be spent a month on clothing. Place this amount of cash in an envelope. When shopping for clothing only spend what is in the envelope. Once this amount is gone you have exhausted your clothing budget for the month.
High Tech Option: Set up a separate checking account (I suggest an ING Orange account) and have a specific amount deposited into your account periodically; for example \$ 50 a week. When shopping for clothing only use the debit card associated with this checking account. The nice thing about this option is that if you are not someone who shops on a weekly or monthly basis the money continues to grow towards your much anticipated shopping spree.

6. Maximize Your Budget: A pair of Jimmy Choo shoes is no longer \$ 500. It's \$ 500 minus the \$ 165 you will get for selling them on EBay the following year. EBay and consignment stores are a great source for stretching your clothing allowance. If you don't have a lot of designer clothing in your closet you can still receive some financial benefit from making a tax-deductible donation to your local goodwill or charity.