4 Big “Gateway Expenses” Everyone Should Watch Out For
Not all expenses are created equal. Some things we buy, and that’s the end of it. Like a cup of coffee. It’s just a coffee. Yet, other expenses are the beginning of a much larger more expensive pursuit. Those expenses are called gateway expenses.
How a Gateway Expense Starts
Take running for example. Running has become a gateway expense for me. What started with an old pair of sneakers has turned into a much more expensive hobby than I ever would have guessed. Since starting to run, I found my shins started to hurt, so I bought some “Real Running Shoes,” and all my shin pain was gone.
That was my gateway expense…
Not experiencing shooting pain in my legs at every step was incredible (up until then, I thought that running = pain). Those new shoes opened the floodway for more running expenses to make my runs more enjoyable. First came the socks, then special running pants, shirts, and shorts (can’t have chaffing). Then came a water bottle and a less than trendy carrier (sorry, I can’t rock a fanny pack like some people can). Then a multitude of running trackers, smart phone accessories, and waterproof headphones.
And the gateway expenses continued.
Then it got cold, and I bought more seasonable wear for my colder runs. All in all, this idea of running has cost me well north of $1,000, maybe even $1,500. It’s been spread out over several years, but it still happened.
Here’s the point: running became my gateway expense to a lot more purchases. I’m not regretting it, but it does make me aware of this before I go diving into other types of endeavors.
What is a gateway expense?
A gateway expense is any type of purchase that will lead you down the trail (I’m just gonna keep going with this running analogy…) to bigger and more expensive purchases. Or worse, recurring expenses that you wouldn’t have had if you had not bought the first expense, as was in my case with the first pair of running shoes.
So how can we tell if something is a gateway expense or a one-time expense? Like all magical answers: it depends. Here are some bigger gateway expenses:
1. New Home
This is the biggest one of all. A new home often means new furniture, new appliances, new carpet, new dishes, new everything. Usually we upgrade to bigger homes. Speaking as someone who has done this, more space only means more space to fill. Which means more stuff. So you end up spending more.
When you go from a two-bedroom home to a three-bedroom house, you have an extra bedroom (and likely another bathroom) to fill up. This leads to what is commonly known in many urban centers as an Ikea trip. This trip is designed to furnish the extra room as quickly as possible.
In reality, you were fine with two bedrooms. But nature abhors a vacuum, and the idea of seeing that open room only makes you want to fill it as quickly as possible. A new home is one of the biggest gateway expenses there is.
2. New Sport or Hobby
Like I mentioned with running, an activity that should only need shoes for, which somehow ballooned into training for a marathon I will never run. Sports and hobbies are often huge gateway expenses. Avoiding these is the reason I haven’t got new golf clubs since I was 12 ( my driver looks like everyone else’s 5 iron). Every year I entertain the idea of upgrading my set, but then I realize the $500 clubs are just the beginning.
Between golf balls, tees, shoes, green fees and practice, it’s not something I want my money (or time) going to on a regular basis. Like my friend warned me years ago: “Golf is at least a $2,000 startup if you plan on doing it frequently.”
Thanks, I’ll run instead.
It’s the same for hockey, collection of memorabilia, learning a musical instrument and a lot of other recreational activities have a tendency to have us buy more, and move up the “bigger, better and more expensive” ladder.
Hey, if you love it…that’s awesome! But know that when you start something, the first cost isn’t the last cost.
3. Landscaping (or any other home project)
If you ever have a conversation that starts with: “We should do something to the yard…” run away! Somehow laying down “some grass seed” immediately evolves into laying sod, building a patio, getting a barbecue, putting in a pool (because you always wanted one). It’s pretty common for home projects to become gateway expenses. (He said while digging more holes for the plants they bought at Costco.) You get into renovation mode, and then it becomes a bouncing ball of expenses.
I have had the “joy” of doing this with several home projects. Somehow changing the carpet in the basement turns into taking out walls, adding a bathroom, and a complete renovation of half the house. This is the most dangerous type of gateway expense, because the costs involved are usually a lot higher.
At the risk of getting some blowback, pets are another gateway expense. These lovable creatures always come with other costs in the form of shots, food, toys, pet sitters, vet bills (we once had a $500 dental bill), and chewed up clothing (sometimes yours and theirs…but mostly yours for some reason).
Having a pet is great, but realize that going through the Humane Society and the low initial price of rescuing doesn’t mean that you are done spending. There are more expenses to come, and they will keep coming for years. Most of us love our pets, and it’s worth it, but you should know that there are a lot more costs to come.
How to cut gateway expenses
Try your best to think it through before you buy the first purchase. I’m not saying any of these expenses are bad; in fact, I would do a lot of these expenses al over again if I had to (except the $500 cat dental bill). However, you should have an idea of what you are getting into.
Think it through a little more than just saying, “We should do this!” What will the new dog cost in vet bills, food and time? Are you prepared to spend that much? Is it really just a can of paint to freshen up that bedroom? Or will you need brushes, tape, drop cloths, then new sheets and accents to match the new wall color? If you get the new house, are you able to say “let’s wait” when it comes to new furniture and renovations? Prod your brain into thinking about other costs down the road. You may be surprised at the extra costs you will have to pay.
Do you have gateway expense you would like to warn us about? Let us know!
Andrew Daniels is the blogger behind Family Money Plan, where he writes about how he and his family paid off their mortgage in 6 years and are now beginning their journey towards financial freedom.
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