When you spend money impulsively, it isn't necessarily on luxuries. We buy some pretty boring stuff: Household cleaning products, for example. Research shows we like to buy practical, useful things, which makes spending impulsively even more dangerous.
When you buy boring stuff, you may not think twice about it. It doesn't feel special, so you add it to your shopping trolley and go on about your day. Most of us could benefit from a little more awareness when it comes to our spending, and spending rules can help with that. Here are five of my favourites.
The 10/10 Rule
Let's say you find a quality coffee maker on sale $30. You don't need a new one, really. And you have other bills to pay, but here you are at the shopping centre and this Bonavita is on clearance and you're not sure if you should just give in and splurge. I mean, you do drink so much coffee.
I established the "10/10 rule" for situations like this, to stop wasting time and money wavering over impulsive purchases. I give myself 10 minutes to think about whether or not I should buy something. If I'm still not sure after 10 minutes, I put the item back if it's $10 or more. If it's $10 or less, I just buy it and stop wasting my time. In other words, I spend:
- No more than $10 on a frivolous purchase
- No more than 10 minutes thinking about it
With this rule, you give yourself enough time to think about your spending, but not so much that you waste that much time. It also ensures that you set a limit on your splurge, ideally keeping your budget intact. Feel free to adjust the rules to your own liking, but this is what works for me. More often than not, I put the item back. Simply having the rule in place reminds me that an impulsive purchase is about to take place, and it's probably not a good idea.
The 'Per Use' Rule
Variations of this rule have circulated for a while, but the idea is the same: Calculate how many times you'll use the thing you're going to buy, then calculate the price per use. From there, give yourself a "per use" spending limit, like $1.
Let's say you're thinking about buying a new $400 robotic vacuum. Maybe it's on sale. You estimate you'll have it for five years and use it once a week. That's 260 times. At $400, your cost per use is $1.50. If your spending limit is $1 per use, this might tell you that the purchase just isn't worth it.
This isn't a perfect rule - maybe the extra $0.50 is worth it because your apartment is drowning in pet hair and you're losing your mind cleaning it up every week. Or maybe you use the rule to justify spending on crap you don't really need - yes, that Bonavita is great and you'll get excellent value out of the cost per use, but hey, your current coffee maker works fine and your budget is already tight.
There are instances in which this rule can fail you, so just use it as a starting point for your decision. Remember: The idea here is to just give a little more thought to your purchases, and the "per use" rule will certainly help you do that.
The 'Wait a Week' Rule
A friend introduced me to this rule. If he wanted to buy anything that cost more than $100, he would force himself to wait a week, even if he knew he was probably going to buy it. This way, he gave himself a chance to think about the purchase rationally. "It also gives me time to do research and make sure I'm getting the best deal," he told me.
Adjust the rule however you see fit. Wait 24 hours for any purchases over $25, for example. Or wait a month for anything over $100. Forcing yourself to wait not only helps you make a more informed and rational purchase, it also makes you feel a little more in control. Instead of feeling regretful and powerless over money, you've called the shots, made a decision, and you're in charge. It seems like a frou-frou, touchy-feely thing to get excited about, but never underestimate the power of emotions when it comes to dealing with money.
The 'Splurge to Save' Rule
This is one of my favourite impulsive spending rules because it's a win-win. Even if you splurge, you're still being (kind of) good with money. Here's how it works: Commit to saving a specific amount every time you give in to an impulsive purchase. This amount can be the same as the splurge, a percentage of the splurge, or just any random amount you like.
For example, if your "splurge to save" rule is, "I will save 50 per cent of the cost of anything I buy that I haven't budgeted for," that coffee maker would cost you $45. (That's $30 for the splurge, $15 for your savings). This way, you save money no matter what decision you make. If you don't spend the money, well, you still have cash in your pocket. If you do spend, you're still saving. You have to think a bit longer about every purchase you make because it will cost you even more.
The Splurge Budget
OK, this isn't a rule, per se; it's a limit you put on your impulsive spending. By definition, impulsive spending is unexpected. As much as you expect yourself to have unlimited willpower and say no to everything, if you're human (and if you're reading this, there's a good chance you are), you'll give in to the temptation to spend at some point. Might as well set yourself some boundaries.
Set aside $25, $50 or $100 - whatever works for your income - for mindless spending every month. Yes, ideally, you'd never spend mindlessly, but again, it happens. However, with a budget for this, you're prepared for the worst. (And you can still try to resist spending!)
It also helps keep your splurge in check. Without a limit, you're more likely to buy the Bonavita and the robot vacuum. You'll tell yourself you only live once and you don't want to do it covered in cat hair. And then you'll destroy your budget entirely. With a limit, you give yourself permission to say yes occasionally, within reason. So put a number on it.
It's OK to treat yourself every now and then (I mean, even dogs deserve treats), just do within your means and without sacrificing your financial sanity later. A treat is a lot more fun when you know you'll still be able to pay rent. Make a few rules for yourself and you can summon your willpower with a little less effort.