Real Accounts: Kate Shares Her Handbag Splurge Story

Name: Kate
Location: Sydney, Australia
Occupation: Writer
Age: 25

When it comes to saving, spending and lending, everyone’s got a story to tell. In our new series, Real Accounts we talk to different millennials about their (very) personal finance experiences and some of the key lessons they’ve learned along the way.

This week we chat to writer Kate, who used her credit card to spontaneously ‘splurge’ on a $2,500 Givenchy handbag four years ago. Was it worth it?

My first loan was more of an emergency fund than anything else. I was moving out of home for the first time to live interstate, and I thought it would be wise to have a $500 overdraft for emergencies. It was just buffer money, as far as I was concerned.

Eight months later, I decided it wasn’t right for me. I cancelled the overdraft and signed up for my first credit card.

Everything happened over the phone. Honestly, I don’t even remember nominating a limit. From memory, I just filled in my salary and attached a payslip. (For context, I was in an entry-level position at the time and earning $50,000.)

To say I was a little bit excited when the bank gave me a $10,000 limit was an understatement. I was cashed up, and rearing to spend. Was I nervous? In hindsight: yes.

Looking back, I really didn’t know much about financial services at all. I’d heard a bit about credit cards, which is why I applied for one, but I knew nothing about loans.

I spoke to my father after the credit card arrived. (Looking back, asking for advice before I applied would have made more sense…) He told me to be sensible and cautious. And for the most part, I was.

There were no crazy purchases straight away… I did buy a $250 dress that was on sale. (In my defence, I still love it.)

After the dress, I bought a Givenchy handbag. It was $2,500. I’d received some money for Christmas, but I decided to buy the bag on the credit card because it was easy. I supplemented my purchase with the money I’d been given. So, in reality, I only borrowed $1,000 for the bag.

I never maxed out my card, nor did it ever decline. It was more the way I viewed money that wasn’t healthy. I thought it was mine for the taking. When in reality, it was never mine.

I realised my relationship with the credit card had changed. My intention was to use the money for emergency living costs, but instead I spent the money on clothes and designer goods.

I still have a credit card today, but I’m much more mindful of my spending. For me, it wasn’t the product that was a problem — it was my attitude.

I learned that a healthy relationship with money is imperative. It’s so important to be in control of your spending and to be responsible.

Here are three things I learned:
  • Really look at what you’re spending your money on. Is it what you imagined or planned for?
  • Investigate your why. Why do you actually need a loan? Which one is right for you?
  • If you decide to get a loan or credit card, do your research and find a responsible financial services company. Make sure they do all the checks and balances before signing you up.

So, four years on, do I regret buying the Givenchy handbag? Absolutely not… in fact, it’s sitting right next to me on my desk as I write this piece.