The 30-Day Rule and Overspending

The discounts, shopping festivals, and their colourful ad campaigns can be really appealing and melt your heart to spend on things you don’t really need leading to impulse spending. If you have enough margin between your income and commitments, then you may not think about the impulsive expenditure you have made. On the other hand, if the margin is thin, you may regret the money you have spent on impulsive purchases by the end of the month when you can’t find a way to manage your inescapable commitments.

As a solution to treat this habit of impulsive spending, here is the ‘30-Day Rule’ you should practice. It can turn out to be a great budgeting tool for you.

What is the 30-day rule? How does it work?

The 30-day rule is a mindset you must practice to get rid of impulsive spending. It also helps you make the right financial decisions. To get the benefits of the 30-day strategy, follow the steps given below.

1. Whenever you feel the urge to buy any non-essential thing, irrespective of a retail store or online store, tell yourself to ‘stop’. Leave from the retail store or close the online store site or the app.
2. Write down the following:
   1. Date of the event
   2. The thing you wanted to buy
   3. Where you can find it
   4. Price
   5. The date after 30 days from the date of the event
3. During the 30-day waiting period, your mind will still dwell on the purchase you delayed. Meanwhile, you will also retrospect if it was a ‘want’ or a ‘need’ to buy the item and whether it is worth spending your discretionary funds on it.
4. After 30 days, if you still wish to purchase the item, you can buy it as it is not impulsive buying anymore.

The concept of FOMO spending

Fear Of Missing Out (FOMO) spending refers to a form of anxiety that makes you think that if you don’t buy a particular item, you will miss out on something big. This is mostly induced by social media where people in your circle keep posting about their new purchases and check-ins, in turn, pushing you into an invisible competition with them. 

The fear of falling behind all of them in the race will lead you to spend your money as a motivation irrespective of your affordability. 

Also Read: 5 Investment Resolutions You Should Make for 2021

Does delayed gratification help?

Delayed gratification is the practice of delaying the act of appreciating yourself until the appropriate time. You can apply this concept to matters related to finances. Though it is not easy to wait to do something that can make you happy when you can do it at the moment, stay informed that delaying gratification can lead to bigger rewards. 

For example, you open an RD account for 6 months where you put in all that money you will be receiving as a hike in your salary. You promise to reward yourself with that rosewood cupboard on the maturity of the 6-month RD if you perform well at your job and succeed to secure a 5 rating even though you can afford to buy the cupboard right now.

Since a rosewood cupboard is not a ‘need’ and only a ‘want’, delay this gratification for some time. Over the next 6 months, you will stay determined at work and give your 100% to secure a 5 rating. Also, you may get the cupboard in a bigger dimension with better design at the end of the 6-month period all at the same price as compared to the present day.

Addition to the 30-day rule

You already know how the 30-day rule works. To make it more diligent, you can add the amount equal to the item’s cost in the bank account that you use for saving. As you watch it earn interest and grow, you may become less tempted to buy that item and want to let the money be there to use it for a bigger purpose. 

Practising this rule will make you less vulnerable to discounts, shopping festivals, and their colourful ad campaigns eventually. Irrespective of the margin between income and expenditure, you will rationally think and then decide rather than spending impulsively.

Gradually, you may come out of the FOMO spending zone and give your mind a moment to differentiate between the necessary spending and unnecessary spending. It can turn out to be a game of saving!

For any clarifications/feedback on the topic, please contact the writer at apoorva.n@cleartax.in