Listen to article
Before you realize what’s happening, you’ve contributed towards the initial payment as your buddies organize a get-together for the upcoming weekend. Given how diligently you work and considering how enjoyable it seems, you definitely deserve this break.
Then your monthly
bills start rolling in
And you find yourself questioning whether an impromptu vacation was really such a great plan.
We’ve been there. But if you find yourself committing to expensive trips or buying high-end items too frequently, one simple
budgeting hack
could help you keep impulse spending under control.
The technique, referred to as the 1% rule, is intended for individuals who frequently discover themselves
splurging on non-essentials
.
If you’re considering splurging on a non-essential purchase — such as a VIP concert ticket, a quick getaway, or something similar,
city break
Or perhaps it’s a designer handbag – and if it exceeds 1% of your yearly earnings, pause for a moment.
Allocate 24 hours for consideration before inputting your final three digits into whichever shopping site you happen upon.
How to scale back on impulse spending?
Spontaneous purchases refer to buying items impulsively without contemplating their financial repercussions over time. Although severe instances may necessitate more rigorous planning or expert assistance, several straightforward approaches can aid in reducing this behavior.
Another money-saving hack ‘
wage-weighting
‘—which occurs when you consider things based on your hourly or daily earnings.
If it amounts to half a day’s work—or perhaps even more than one—is it still justified? Considering the number of hours you’d need to put in to earn enough for something might just be the key to avoiding frivolous expenses.
Alice Tapper, the financial specialist from Go Fund Yourself, formerly stated
:The difficulty we encounter lies in grasping the true worth of money.
‘Once you think about the amount of time you have to work to be able to buy something, it starts to feel more manageable.’
This cooling-off period provides time for second thoughts regarding the purchase. Should you be eager to acquire it, there’s no downside in spending an additional day contemplating your decision.
The guideline gained popularity through Glen James, who hosts the Australian financial podcast “My Millennial Money,” and has subsequently been extensively shared by financial experts on social media platforms.
TikTok finance expert
@frugal_spender
suggests this strategy for individuals whose annual income is under £100,000—particularly those making slightly less or more than the national average of £36,000.
He states that the tip ‘is ineffective for those with extremely low incomes and also does not apply to individuals with very high incomes.’
He clarifies: “For instance, if your annual income is £30,000 on average, 1% of this amount equals £300. Before buying something priced above £300, consider giving yourself some time to think about it.”
‘It requires an entire day, 24 hours, for you to determine if that choice is the correct one.’
‘This doesn’t imply that you must refrain from indulging yourself financially; it simply suggests that you’re making thoughtful decisions about where your money goes.’
Finance guru
@christosfellas
also explained the rules to his followers, saying: ‘When you wake up in the morning you can weigh up the pros and cons of how that thing can actually bring you value.
‘Doing this will likely stop you from making those bad impulse buys and the things that you do go ahead and buy will end up bringing you lots of value.’
Comment now
Have you tried the 1% rule and has it helped your budgeting?
Comment Now
Matthew Sheeran, money expert at Money Wellness, tells
The 1% rule serves as an ‘easy and smart method to avoid those “_should I, shouldn’t I_” dilemmas before making impulsive purchases’.
He mentions: ‘This is particularly useful for larger discretionary expenses, such as purchasing new technology, furniture, or taking a short trip over the weekend.’
‘Allotting yourself one day might be sufficient time to avoid an impulsive purchase and determine what you truly desire, or whether it was merely a fleeting “browse-induced” urge.’
Nevertheless, this method doesn’t guarantee prevention of overspending.
‘It isn’t a magical solution for handling finances or escaping debt,’ Matthew explains. ‘It serves as an excellent beginning, yet for significant financial concerns, you may require a more comprehensive strategy.’
Would you like to share a tale?
Get in touch by emailing
[email protected]
.
Subscribe to ‘s The Slice newsletter for your go-to resource on all things happening in London, featuring reliable reviews, promotions, and contests.
Leave a Reply