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.
What Is the 30-Day Rule?
Instead of allowing yourself to make that impulse purchase, wait for 30 days before you buy — that’s the 30-day rule.
Following this rule means you defer all non-essential purchases 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.
Why the 30-Day Savings Rule Works
In many cases, you might decide you don’t need or want the item after all. This means you can put the money into a savings account to meet some other, future financial goal.
Waiting 30 days also gives you that time to save up for the purchase in case you do decide you still want it — this is especially helpful for larger purchases.
Impulse spending is often an emotional decision, so by forcing yourself to wait 30 days on non-essential purchases, you remove emotion from the equation. This is an important consideration because spending money impulsively often involves buying something that doesn’t serve any real purpose.
Tips To Make the 30-day Savings Rule Work For You
Here are some steps you can take to integrate the 30-day savings rule into your financial life:
- Identify needs vs. wants. Start out by identifying essential and non-essential purchases. Non-essential items fall into the “want” category, and these are the items to which you should apply the 30-day savings rule.
- Set up a dedicated savings account. This is a way to ensure that you have the funds after 30 days — and if you don’t spend them, you’re 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 non-essential purchases from good old fun — which is something you shouldn’t sacrifice and doesn’t really fall into the category of impulse buying.
- Make it a challenge. Use a money-saving challenge, like the $5 challenge or the bowl-grab challenge, to save up during those 30 days and keep yourself on track.
Other Ways To Save Money
If you’re not big on impulse buys to begin with, the 30-day savings challenge might not help you much — but there are plenty of other savings strategies out there.
What Is the 50/30/20 Budget Rule?
Split your income into three categories: 50% goes toward needs, 30% goes toward wants and 20% goes into your savings. Needs include essential expenses such as housing and food, while wants may be things you can live without, like hobbies and dining out — and impulse purchases. The 20% that goes into savings can be divided further between a savings account and investments.
Having only three categories to track can make it easier to stay on top of your finances. Is the 50/30/20 rule realistic, though? Many people can’t afford to save 20% of their income every paycheck, but you can adjust the percentages to fit your needs. You can use the 70/20/10 budget instead, or change it up even more. Even if you’re saving just 5% — or 1% — it’s better than not saving at all.
Now that you know what the 30-day savings rule is, think about how you can apply it to your own life and finances. Have there been situations where waiting would have prevented an impulse purchase? Next time, try applying the 30-day rule.
FAQHere are the answers to some frequently asked financial questions about 30-day rules.
- Can I sell a stock and buy it back within 30 days?
- You can sell a stock and buy it back within 30 days, but if you sold it at a loss, you won't be able to use the loss to lessen your tax burden.
- If you bought a stock and then sold it for a loss, this loss can be written off on your taxes. However, if you buy those shares again within 30 calendar days of the sale, you are no longer allowed to write off the loss from the initial sale. This is the "wash-sale rule" and is meant to prevent investors from claiming losses on an investment they don't mean to exit.
- Is the wash-sale rule 30 days or 31 days?
- To avoid the wash-sale rule, you cannot buy the same stock for 30 calendar days before and after the day you sell. The day on which you sell is not counted as one of the 30 calendar days. Therefore, you could say that the wash-sale rule is 31 days if you include the day on which you sell.
- Note that these are calendar days and not trading or business days, which means that the market does not need to be open for a day to count.
Vance Cariaga contributed to the reporting for this article.