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A man recently phoned into The Ramsey Show, wondering when to draw the line when spending on upgrades that feel nice but aren't strictly necessary (1). He had splurged on an“economy plus” airline seat for a step up in comfort and now felt a twinge of guilt.

“I'm kind of feeling a bit guilty about it,” he admitted.

That question - when does a“nice-to-have” become a financial misstep. Many consumers are wrestling with how to balance comfort and caution, especially as high living costs push many households to second-guess every nonessential purchase.

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Canadians feel the same pinch

Surveys show that Canadians struggle with impulse spending, with one report revealing how 48% of Canadians admit to spending more than they should and 15% believe that impulse spending is blocking their financial progress (2).

Another report revealed that 19% of respondents said they regret their holiday purchases when they get their credit card bill in the New Year (3).

Additionally, 51% of Canadians admit to having bought something after seeing an influencer use it - a figure that rises to 67% among 18- to 29-year-olds (4). Whether it's luxury skincare, travel upgrades or tech accessories, it's easy to make an impulse purchase in a social media-driven world. Small indulgences can easily put a big hole into your budget.

The 0.01 % rule

A good tip is to use the“0.01 % rule.” It suggests that if a discretionary purchase is less than 0.01 percent of your net worth, you can make it without upsetting your long-term financial trajectory (5).

For example, with a net worth of $300,000, 0.01 % translates to $30. That becomes your informal“splurge ceiling” - amounts under that threshold are virtually harmless; those above warrant more scrutiny.

That said, it's not the only approach. Before green-lighting discretionary upgrades, The Ramsey Show co-host Jade Warshaw recommends checking off five key pillars of financial security, which includes debt, a budget, proper insurance, savings and generosity.

Read more: Here are 5 expenses that Canadians (almost) always overpay for - and very quickly regret. How many are hurting you?

The risk of upgrades for Canadians

Without the five-step rule, here's how things might go wrong for Canadians when choosing to satisfy consumerist urges over other more important matters:

Debt

Canada's household debt levels are high: in Q2 2025, the debt-to-income ratio hit about 171% (6). When you carry high-interest credit card or unsecured debt, using money for upgrades diverts cash that could otherwise accelerate paying it down.

No budget

Without disciplined budgeting, upgrades may become slippery slopes. The cost creep of minor upgrades can accumulate unnoticed until it is shockingly high.

Inadequate insurance

In Canada, many households underestimate the cost of serious illness, disability or other unforeseen financial disturbance. Spending on comfort when your insurance coverage is weak is quite risky - one health shock, accident or major home repair could erase the benefits of that upgrade.

No savings or emergency funds

A study found that only 53% of Canadian households have an emergency fund. Without a safety net, a surprise repair or job loss can force you to liquidate or go into debt (7) which is not ideal for the sizeable portion of Canadians that have no emergency savings (8). Also, a CIBC poll found 45% of Canadians don't have an emergency fund that could cover a surprise expense (9).

Furthermore, Statistics Canada data reveals that one in four Canadians (26%) say they couldn't cover an unexpected $500 expense. Without a safety net, a sudden job loss, car repair or medical bill can force you to liquidate savings, pull from retirement, or run up more debt.

No generosity

Without purpose, spending becomes hollow. People who never pause to give or save often find they overspend out of emptiness, not joy.

Overall, upgrading to more legroom on a flight is harmless for Canadians. But if you're underwater in debt and ignoring your budget, the extra $50 or $100 can be the first step toward financial strain.

The five-pillar green light is a reminder to check your financial foundation before you indulge, while the 0.01% rule provides an alternative metric for everyday choices. If all five lights are green, go ahead and enjoy. Otherwise, wait, build and save before you reward yourself.

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Article sources

We rely only on vetted sources and credible third-party reporting. For details, see our editorial ethics and guidelines.

The Ramsey Show Highlights (1 ); BMO (2 ); Equifax (3 ); IZEA (4 ); Wall Street Journal (5 ); Trading Economics (6 ); Qxplore (7 ); RBC (8 ); Advisor (9 )

This article provides information only and should not be construed as advice. It is provided without warranty of any kind.

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