Impulse spending is never a good idea from a financial standpoint, but it’s especially risky in an economy exhibiting the highest rate of inflation in 40 years. You’re not only buying something you probably don’t need — you’re also paying a lot more for it than you normally would.
One way to wean yourself off of impulse spending (and put your money to better use) is by following the 30-day savings rule. It basically boils down to this: The next time you consider making an impulse purchase or buying something you don’t need, stop yourself and think it over for 30 days.
Following this rule means you defer all non-essential purchases and impulse buys for 30 days, which gives you ample time to think about whether you really need to make the purchase. If you still want the item after 30 days, then by all means purchase it — if you have the money, and aren’t forgoing another important payment.
In many cases you might decide you don’t need the item after all, which means you can put the money into a savings account to meet some future financial goal.
As Canadian fintech Koho noted on its website, by forcing yourself to wait 30 days on non-essential purchases, you take emotion out of your spending. This is an important consideration because spending money impulsively often involves buying something that doesn’t serve any real purpose.
Here are three steps Koho recommends to integrate the 30-day savings rule into your financial life:
- Identify needs vs. wants. Start out by identifying essential and nonessential purchases so you can figure out what you need and what you don’t. Nonessential items fall into the “want” category, and these are the items to which you should apply the 30-day savings rule.
- Set up a savings account specifically for the 30-day savings rule. This is a way to ensure that you are rewarding yourself for all the impulse purchases you forego. To make the reward even bigger, put your money into a high-yield savings account for the best return on your money.
- Establish a separate entertainment fund. This will help you separate nonessential purchases from good old fun — which is something you shouldn’t sacrifice, and doesn’t really fall into the category of impulse buying. An entertainment fund ensures that you still have money around for dining, traveling, streaming subscriptions, concerts, games or nights on the town.
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