Personal Finance

We have our 3rd kid on the way - is it worth it to splurge and get a custom home?

Joey Frenette

Published: February 8, 2025 12:37 pm

Sometimes, it’s tempting to find ways to justify splurging a large chunk of your savings. In this piece, we’ll check in on an individual who posted on the r/fatFIRE subreddit wondering if they should move out of their condo and make a “splurge” on a custom home. They’ve got more than enough cash in the bank, with a net worth sitting at $7 million, with the fat FIRE “goal” of $15 million. With a budget upwards of $4 million for the custom home, their net worth is going to be cut by more than half.

Undoubtedly, it’s tempting to want more space to make way for a larger family. And while a condo may no longer feel comfortable with five people in the household, I’d not encourage rash, emotional decision-making. Indeed, you can find numerous ways to justify a massive splurge if you go looking for them.

Splurging on a custom home could set one’s fat FIRE prospects back by miles.

Personally, I think there’s absolutely no need to spend more than half your wealth on a luxury just because you can. Of course, the couple may be really keen on a custom home, but it could prove trickier to hit their fat FIRE goal if they make the splurge.

In fact, given uncertainties with the future of inflation and the labor market, perhaps a fat FIRE will need to be downgraded to a chubby (down a notch on the lavishness) or even a moderate one. And given how expensive children can be (think of three college educations that will need to be paid for), perhaps an early retirement could be ruled out altogether.

In any case, it comes down to what the couple prioritizes most: having that expensive custom home or a fat FIRE type of retirement that entails extravagant spending. Of course, a financial advisor is a must for this particular case.

If you can afford to blow millions on a splurge, you can surely afford to get a second opinion from a professional who can help you navigate your personal budget and balance sheet en route to making the right decision. Indeed, spending millions on anything is not something to be taken lightly. 

For this Redditor, there are ways to have your cake and eat it, too.

With such a high net worth and an ambitious target on the $15 million milestone, one can certainly afford to splurge here and there and still hit their goals. That said, in the case of a custom home, I think it’s a risky move that could set one back by some years, if not decades, especially if there’s a correction in real estate in the cards. Is it really such a good idea to put close to 60% of one’s net worth in a single asset? I’m not so sure. 

I think it makes sense to forego a custom home (an unnecessary splurge) and just buy one that’s pre-built. Remember, a custom build does not necessarily have more value in the mind of a future buyer. Given this, a custom home seems like quite a waste.

Of course, contact a financial advisor and get their take before making a move. Indeed, a home does not have to cost more than $1 million, especially if you’re willing to live in the suburbs or settle for a townhome. In any case, I’d go about seeking value in the real estate market rather than blowing a substantial sum on an “investment” that may not have an all-too-ideal return on investment.

The bottom line

There are better ways to go about upsizing one’s living situation without having to go down the most expensive route, potentially jeopardizing their fat FIRE plan in the process. Instead of committing more than half of one’s net worth, perhaps committing to spending a quarter or less could make the most sense, regardless of how many people will be in one’s household.