💄 The Lipstick Index: What It Tells Us About Money and Mindset

Photo of a Labubu by Julee Juu on Unsplash.

Any reference to specific products or sites in this article is for informational purposes only and does not constitute an endorsement by Little Success Habits. The information and estimates contained herein does not constitute the provision of financial or investment advice.

In times of economic uncertainty, people still want a little luxury. That’s where the Lipstick Index comes in — a term coined by Estée Lauder Chairman Leonard Lauder during the 2001 recession (Smith, 2025). He noticed that while consumers cut back on expensive items, sales of lipstick actually went up. Why? Because people still craved a small treat, a tiny dose of control, confidence, or comfort. "The Lipstick Index suggests that the sale of lipstick and economic growth are inversely related" (Smith, 2025).

Is there a significant amount of economic uncertainty in the U.S.? It certainly seems that way, especially when the current and potential future spending of consumers is considered. When a set of 3,854 U.S. consumers was surveyed by McKinsey & Company between April and May 2025, 'Rising Prices/Inflation' and 'Tariff Policies' were the top 2 concerns (Coggins et al, 2025).

Economists and analysts now use the Lipstick Index as an informal gauge: when the economy dips, small indulgences rise. At LSH, this has the potential to highlight the underlying habits.

🧠 The Micro-Spend Mindset

Most people don’t stop spending altogether. They just shift from macro-luxuries (cars, vacations, tech toys) to micro-luxuries (think $10 coffee runs, $20 lipsticks, $45 dinner out). There's an increase in the smaller treat items. An updated report on consumer sentiment from McKinsey & Company, highlights that "more than 60% of consumers have either changed or expected to change their spending habits" due to the tariff news (Coggins et al, 2025).

That hasn't stopped or slowed down the 'Labubu mania' (Botelho, 2025). The Standard Blind Box figures for a Labubu (cute toy monsters sold by Pop Mart), where you don't know what you're getting for a random rarity is $8.99 to $27.99 (Kumar, 2025). The viral plush toy which could be considered a micro-luxury even a collectible, in May of 2025 had sales of approximatley $4.8 million dollars on TikTok Shop U.S. (Botelho, 2025). As Brennan Schlagbaum (@budgetdog), Personal Finance Expert, highiglights about the Labubu toys like other micro-luxuries, "These small luxuries become a lifeline to feeling normal..." and "Luxury won't fix your debt" (from @budgetdog's Threads Aug. 3rd 2025). There is certainly worry and anxiety about the U.S. economy and people's lives, regardless of whether it could be a recession indicator.

The small purchase says: “I deserve something.”The trap is: we often spend to feel better, not to build better.

👁️ Why It Matters for Your Habits

• Awareness: Are you using small spending as a coping mechanism?

• Intentionality: Can you still enjoy small pleasures without sacrificing your long-term goals?

• Reframe: What if the best “treat” during hard times is investing in your future — not just spending $15 on feel-good today?

  
  

💰 Little Habits, Big Shifts

At LSH, we believe in compounding. That includes emotional spending habits. A $10 lipstick may seem small, but a few lipstics and a few other things just because, 10x a month, that’s a $1,200-a-year signal from your subconscious: “I’m treating stress with spending.”

Let’s flip that.

• Treat yourself — on purpose, not on impulse. Have it in the budget.

• Track your micro-spending — not to shame it, but to understand it.

• Practice the 'Habit of Waiting to Spend' — wait a few days to a week before buying the thing. That can transform an emotional swipe into a mindful choice.

• Turn desire into discipline — because investing in yourself should feel just as good as buying something new.

Final Thought

In hard and uncertain times, humans still seek comfort. That’s okay. But long-term wealth comes from turning emotional spending into empowered decision-making.

💡 What’s your “lipstick”? How many Labubus do you have? And what might you replace it with that builds wealth instead of draining it?

To your success.