פירוש על בבא קמא 18:1

If we say one-third of his estate. How much is one required to spend in order to perform a mitzvah? That is the central issue of this Tosafot. The sources in Gemara are few and vague and Tosafot constructs his opinion based more on what has not been said than on what has been said. The first question one might ask is why is there any limit at all to the amount one is required to spend. Hashem tells us to buy an esrog, theoretically we should have to spend whatever it takes. Perhaps we should even have to go into debt? The consensus is that we are required to look not only at the cost of the particular mitzvah but also at the ramifications of spending all of one’s assets on a mitzvah. If you spent all your money on an esrog you would then have to live a life of poverty. Chazal say that poverty leads one to go against his master’s will. Obviously, the performance of a mitzvah cannot require us to put ourselves in a situation where we are liable to eventually go against the will of our Master. We must avoid poverty even at the cost of a particular mitzvah. We must now search for sources that will teach us what is considered an amount that may lead to poverty and what is not. Tosafot now leads us on a step by step tour through the available sources.
Our Gemara asks: if one was faced with three mitzvos, would he be required to spend all his money?
This question implies that one does not have to squander all his assets to purchase an esrog, even though he cannot find one for less and it is a mitzvah that passes with time. The mitzvah of esrog is limited to the first day of Sukos by Torah law. If one does not purchase an esrog, he will lose the opportunity to do the mitzvah.
Our Gemara is not discussing spending all of one’s assets for one mitzvah. It is discussing spending all of one’s assets for three mitzvos.
And it seems from our Gemara that even to spend a third of his assets¹ ביתו literally means his house. is not required.
Tosafot shows us his final source that reduces the obligation even further, to a fifth of one’s assets.
And we also say in Ketubot (50a): He who squanders should not squander more than a fifth.²The Gemara in Ketubot is discussing the maximum one should give of his assets to charity. Tosafot assumes that the same limitation applies to other mitzvos as well.
Even to spend a major amount of money for the performance of a mitzvah is not required.
And in sukoh (41b) the Gemara considers it surprising that Rabon Gamlee’ail purchased an esrog for one thousand dinar.

If it happened to him. The Gemara is attempting to prove that it is not likely that one should have to spend a third of his wealth to perform a mitzvah. The Gemara argues that if he was faced with three mitzvos he would have to spend all his assets on those mitzvos. This statement is not entirely accurate. For if he was faced with three mitzvos and spent a third on the first mitzvah, for example if he owned three hundred dollars and spent one hundred on the first mitzvah, he would have to spend only one third of the two hundred dollars that was left after the first mitzvah and so on. He would never spend all his assets. This system is referred to as the tenths of Rebbe, who said that male heirs of an inheritance must spend a tenth of their assets to marry off their sisters. The Gemara asks: if they have ten sisters they will have nothing left? The Gemara responds that they give for the second sister only a tenth of what was left after the first sister married. Their entire fortune will not be spent.
Even if we say that the third that must be spent for each mitzvah is along the same pattern as the tenths of Rebbe, as we find in chapter M’tzias Ho’eeshoh (Ketubot 68a), and one would virtually never spend all his assets on the performance of mitzvos if this model was followed, even so the Gemara knew that one is not liable to spend so much of his wealth for the performance of mitzvos.