Each year, when I sort through my closet, I'm reminded of just how much stuff I’ve accumulated—things I once wanted or thought I needed but now consider clutter.
Some items were quite costly, and seeing them lose value has taught me an important lesson: many purchases quickly depreciate and even high-end items rarely hold their original worth.
To address this, I developed a system to categorize my purchases. By dividing everything into four value-based categories, I’ve managed to streamline my shopping habits and direct my money towards things that offer lasting value.
Category 1: No Resale Value – Minimizing Everyday Clutter
The first category, No Resale Value, includes everyday consumables, such as household goods, trendy decor, and small impulse buys I often pick up just to reach a discount.
These items, while affordable, add up over time and leave me with items I can neither sell nor reuse effectively. I’ve found that this category was previously responsible for a large chunk of my budget—about 20%.
However, by becoming more conscious of these small expenses, I’ve trimmed this down to 15%. This shift has not only decluttered my space but also minimized waste, making me feel better about my spending habits.
Category 2: Low Resale Value – Cutting Down Bulk Purchases
Low Resale Value items fall under the second category. These include items that can be recycled or sold in bulk, like metal trinkets, outdated magazines, or old appliances.
They have some resale potential but are rarely worth the time and effort required to sell them individually. Reflecting on this category has made me more aware of the hassle associated with managing such items, motivating me to cut my spending from 30% to 20%.
The reduction was an easy win for my budget, and I’m now less inclined to buy things that hold so little value over time.
Category 3: Half-Value Items – Being Selective with Luxury Purchases
The third category is where it gets tricky: Half-Value Items. These are pricier goods, such as luxury items, electronics, and jewelry. Often branded and initially valuable, they depreciate swiftly and require careful handling to resell for even half their original price.
Recognizing that many high-end items are hard to resell—often due to brand reputation or minor wear—has helped me curb my indulgence in this category.
By consciously reducing my spending here from 30% to 20%, I’ve freed up cash that I can put towards other financial priorities, like investments, which offer better returns in the long run.
Category 4: Value-Add Items – Understanding the True Cost of Collectibles
Lastly, my fourth category is Value-Add Items, including pure gold, collectible coins, or items with the potential to appreciate.
While these can sometimes gain value, they often involve high fees or taxes when sold, making them less liquid than traditional investments like stocks. While tempting to buy, they’re not a reliable investment.
This insight has helped me avoid the illusion that collectibles are a sound financial strategy, and I now keep my spending here to a minimal 10%. I treat these purchases more as passion investments, which keeps my expectations realistic.
Since using this categorization system, I’ve significantly reduced impulsive purchases, saving around 35% of my previous spending. This conscious shift has allowed me to channel more funds into growing my wealth, such as investing in index funds, which bring a higher return than most physical items ever could.
By focusing on intentional spending, I’m not only maximizing each dollar I spend but also reducing clutter and boosting financial security. Intentional, value-driven spending has been transformative, freeing me from the cycle of buying and discarding, and instead guiding my money toward a future that truly matters.
If you’d like a copy of this shopping checklist to help you make more mindful purchases, here is the download link.
