Just because its XBox, it doesn't automatically make it a waste of money
Well, no, but it kind of does.
Of course, grown adults can spend their money on what they like, including £500 on an XBox and £60-70 on each game. And you can argue that it's only like spending money on other reasonably pointless consumables like golf clubs or football season tickets or theatre tickets or gigs or whatever...
But spending thousands of pounds on XBox in-game consumables is different because they literally don't exist and are designed purely as a money-suck - an easily accessible way to drain your bank account. They are like the spins of a virtual casino game. Lights and sounds to trigger your endorphins. The value you get from the spend is out of kilter with the value of the other things you mention.
For that £4k, you could see fifty West End shows or buy 400 paperback books. A Premier League season ticket near here costs £600. It's more than three times the cost of an average UK golf club membership. It's about a thousand pints of beer.
So, in this case, it is automatically a waste of money. You can't spend £4k on in-game purchases without wasting it. It's just bullshit money.