What is the dividing line between enjoying adornment and the good things in life, and extravagance and wastefulness? And is it permissible for a very wealthy man to pay Zakat by purchasing a ring for his wife for a million [currency unit] or a car for hundreds of thousands?

Allah Almighty clarifies in His Noble Book the sound methodology for spending. Believing servants are those who, when they spend, neither act extravagantly nor are they parsimonious; rather, they are justly balanced and excellent. The best of matters are those in the middle. Extravagance is exceeding the sufficient amount, or overindulging in luxury, or transgressing from the permissible to the forbidden.

Expenses vary from person to person due to the disparity in provisions. What is considered extravagance for one person may not be so for another. One who exceeds his capacity to emulate those wealthier than him is considered extravagant, like someone who spends all he possesses on luxuries and then becomes unable to cover essential expenses.