A simple yet effective strategy, the 30-day savings rule is something anyone can implement in their financial routine to help curb impulsive spending.
The rule, which encourages people to pause and reflect on nonessential purchases for a month before making them, can lead to substantial savings growth. It’s especially salient at a time when 57 percent of Americans are uncomfortable with their level of emergency savings.
Here’s how the 30-day savings rule works and how it helps you save.
Understanding how the 30-day savings rule works
The premise of the 30-day savings rule is straightforward: When faced with the temptation of an impulse purchase, wait 30 days before committing to the buy. During this time, take the opportunity to evaluate the necessity and impact of the purchase on your overall financial goals.
Some questions you can ask yourself during the month-long interval before making a decision on the purchase are:
- Is the item/service a need or a want?
- Can I afford it without sacrificing other financial goals?
- Have I researched better deals and alternatives?
- Can I allocate the money to a higher priority?
You can apply the rule to both large purchases and small daily expenses. Imagine being tempted to purchase a high-end electronic item for $800. Waiting 30 days provides time to assess whether the item is a genuine need or a fleeting desire, encouraged by flashy marketing.
Or, consider a daily habit, such as buying a cup of specialty coffee for $6. Over the course of a month, this routine can accumulate to $180. Applying the 30-day rule in this case might mean making coffee at home for a month and potentially redirecting that money toward savings or debt repayment.
What is impulse spending?
Impulse spending refers to the spontaneous purchases made without thorough consideration or a genuine need. It’s the quick decision to buy something simply because it’s momentarily appealing.
While it might lead to a sense of instant gratification, impulse spending can contribute to a number of long-term harmful effects taking aim on your wallet. It can erode your budget, diverting funds from essential expenses or financial goals. It can also lead to increased debt and diminished savings. Eventually, it might cause a strain on your financial well-being and mental health, due to feelings of guilt, regret and struggling to keep up with your finances.
By introducing the 30-day rule into your life, you directly address impulse spending. The rule acts as a cooling-off period, encouraging time for reflection and a more intentional approach to spending. It can help you distinguish between genuine needs and impulse wants while minimizing buyer’s remorse.
Tips for implementing the 30-day rule
To make the most of the 30-day rule, follow these steps:
- Create a wishlist: Maintain a list of items you desire to purchase and revisit it after the waiting period is up. You might find that some of those items have lost their appeal.
- Track savings: Use a dedicated savings account for the money you save by resisting impulse spending. Seeing how your savings grow can serve as a continuous motivator.
- Prioritize financial goals: Consider how the potential purchase aligns with both short-term and long-term financial goals. Redirect funds toward these goals as needed.
- Use a budgeting app: You can leverage technology to help you keep track of your spending and goals. Apps like PocketGuard and You Need a Budget can provide real-time insights into your spending habits, so you gain awareness of how you tend to impulse buy and where to focus on saving more.
- Reward yourself occasionally: Not every purchase needs to be put off. It’s important to have an intentional reward system in place to make the process of curbing impulse spending more enjoyable. Just make sure that the rewards remain in your budget — a reward can be something non-transactional, too, such as a day trip to the beach.
Bottom line
By incorporating the 30-day rule into your financial toolkit, you can not only control impulse spending but also establish a solid foundation for long-term financial stability. Consider redirecting savings to an emergency fund, to ensure that you have a financial buffer in the case of an unexpected expense.
FAQs
Here's how it works: When you have the urge to make an impulse purchase, wait for 30 days and give yourself time to think about it. While considering the purchase, deposit the money you need for it into a savings account. If you still want to buy that item after the 30-day period is up, go for it.
What is the 30 day saving rule? ›
The 30 day savings rule is simple: the next time you find yourself considering an impulse buy, stop yourself and think about it for 30 days. If you still want to make that purchase after those 30 days, go for it.
What is the 70 20 10 budget rule? ›
This system can help you get better acquainted with what you earn and where it goes, while tracking your daily spending (that's the 70% of your after-tax earnings) plus debt repayment and saving (the 20% and the 10%).
What is the 60 20 20 rule? ›
If you have a large amount of debt that you need to pay off, you can modify your percentage-based budget and follow the 60/20/20 rule. Put 60% of your income towards your needs (including debts), 20% towards your wants, and 20% towards your savings.
Is the 50/30/20 rule realistic? ›
The 50/30/20 rule can be a good budgeting method for some, but it may not work for your unique monthly expenses. Depending on your income and where you live, earmarking 50% of your income for your needs may not be enough.
What is the 80 20 30 rule for savings? ›
YOUR BUDGET
In the 50/30/20 budget, you spend 50% of your income on needs, 30% on wants, and 20% on savings. The 80/20 budget is a simpler version of it. Using the 80/20 budgeting method, 80% of your income goes toward monthly expenses and spending, while the other 20% goes toward savings and investments.
How to save $500 in 30 days? ›
Make daily goals
For something as short-term as this, it may be easier to set smaller, daily goals in order to make saving a part of your daily routine. In order to save $500 in 30 days, you would roughly need to save $17 per day, and this can be a combination of cutting back on spending and making extra money.
What is the 60 40 30 rule? ›
60/40. Allocate 60% of your income for fixed expenses like your rent or mortgage and 40% for variable expenses like groceries, entertainment and travel. 30/30/40.
What is the 40 40 20 budget rule? ›
The 40/40/20 rule comes in during the saving phase of his wealth creation formula. Cardone says that from your gross income, 40% should be set aside for taxes, 40% should be saved, and you should live off of the remaining 20%.
What is one negative thing about the 50 30 20 rule of budgeting? ›
Some Experts Say the 50/30/20 Is Not a Good Rule at All. “This budget is restrictive and does not take into consideration your values, lifestyle and money goals. For example, 50% for needs is not enough for those in high-cost-of-living areas.
When following the 10-10-80 rule, you take your income and divide it into three parts: 10% goes into your savings, and the other 10% is given away, either as charitable donations or to help others. The remaining 80% is yours to live on, and you can spend it on bills, groceries, Netflix subscriptions, etc.
What does the 80-20 rule control? ›
The Pareto principle states that for many outcomes, roughly 80% of consequences come from 20% of causes. In other words, a small percentage of causes have an outsized effect. This concept is important to understand because it can help you identify which initiatives to prioritize so you can make the most impact.
What is the 80-20 rule strategy? ›
What's the 80-20 Rule? The 80-20 rule is a principle that states 80% of all outcomes are derived from 20% of causes. It's used to determine the factors (typically, in a business situation) that are most responsible for success and then focus on them to improve results.
Can you live on $1000 a month after bills? ›
Bottom Line. Living on $1,000 per month is a challenge. From the high costs of housing, transportation and food, plus trying to keep your bills to a minimum, it would be difficult for anyone living alone to make this work. But with some creativity, roommates and strategy, you might be able to pull it off.
Is $4000 a good savings? ›
Ready to talk to an expert? Are you approaching 30? How much money do you have saved? According to CNN Money, someone between the ages of 25 and 30, who makes around $40,000 a year, should have at least $4,000 saved.
How to budget $5000 a month? ›
Consider an individual who takes home $5,000 a month. Applying the 50/30/20 rule would give them a monthly budget of: 50% for mandatory expenses = $2,500. 20% to savings and debt repayment = $1,000.
What is the 50 30 20 rule on 3000 a month? ›
Calculating your target budget
If you make $3000 a month after taxes, then 50% ($1500) would go toward needs, the next 30% ($900) goes toward your wants or discretionary spending, and the remaining 20% ($600) goes toward your savings.
What is the 30-day savings plan? ›
Here's how it works: When you have the urge to make an impulse purchase, wait for 30 days and give yourself time to think about it. While considering the purchase, deposit the money you need for it into a savings account. If you still want to buy that item after the 30-day period is up, go for it.
What is the 30-day rule for buying? ›
A simple yet effective strategy, the 30-day savings rule is something anyone can implement in their financial routine to help curb impulsive spending. The rule, which encourages people to pause and reflect on nonessential purchases for a month before making them, can lead to substantial savings growth.
What is the 50 20 30 rule for savings account? ›
Do not subtract other amounts that may be withheld or automatically deducted, like health insurance or retirement contributions. Those will become part of your budget. The 50-30-20 rule recommends putting 50% of your money toward needs, 30% toward wants, and 20% toward savings.
