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Price Limits, Blow Money and the 24 Hour Rule

24 hour ruleDo you have a 24 hour rule on big purchases? This strategy, plus two other strategies helped my family spend less and produce massive amounts of savings each month.

I’ve mentioned before how I’m a recovering spend-a-holic. In another life, I spent to my heart’s content, undeterred by any financial damage it would cause. I wrecked our ability to save and follow any semblance of a budget.

My wife and I would have frequent “discussions” about our my spending patterns. The discussions were mostly one sided, with me downplaying the extent of our my struggles. I got so good at deflecting any negativity about our my poor spending habits that I usually ended up getting what I wanted at the end of those conversations. Kudos to my wife for putting up with me…I was a mess.

Clearly I had convinced myself there was no problem.

It’s very easy for spending to spiral out of control. Much of the time, we do damage simply by not developing a system of checks and balances to monitor what’s going on. We end up waking up one day with a mess on our hands, wondering how we got there.

The biggest step that had to take place for my spending habits to change was a shift in my attitude. Thankfully for me, that did take place through a series of well-timed events that occurred at a point when my mind was open to improvement. Only after I willfully chose to get my act together and develop some discipline could my wife and I move forward with some strategic practices to curb spending.

Two such practices we implemented proved valuable for us. Those were setting price limits on spending and following the 24 hour rule.

Price Limits

The price limit rule goes something like this: “If the cost of the purchase of any one item is over $______, I’ll talk to my spouse (or accountability partner if single) before I buy it.”

A couple of things I really like about this rule:

It brought my wife and I together ahead of time (before the purchase) as we communicated on what the specific dollar amount would be. Communication in a relationship is always a good thing.

It allowed for freedom to spend up to the agreed on limit, providing the budget still allowed for it that month. That freedom was especially important to me being the natural spender in the relationship.

It capped what I could spend without consulting my wife. This was a great assurance to her, being the one setting up the budget and more concerned about saving at the time.

The price limit rule varies for different people. What’s expensive for me might not be for someone else. Each person or couple will have to set their own limit based on their comfort level.

Another point is that the limit can change over time. Ours has gradually gone up through the years as we’ve developed a better handle on our finances.

The 24 Hour Rule

Those who follow the 24 hour rule set this standard: “Do not commit to big purchases without sleeping on the decision overnight.” I highly recommend this one because of what it will stifle – our emotion.

I would say most of our big purchasing mistakes happened because we were swept up in emotion. We became so excited about making a purchase that all logic and reason went out the door. All we could think about was having that new, cool thing in our living room, or parked in the driveway or being swung out on the driving range.

I heard the saying somewhere “Most accidents happen on the showroom floor.” Translation – we screw ourselves financially at the buy. That was us, with many different types of purchases.

Sleeping on a big decision overnight allows the body’s excitability levels to return to normal. It removes us from the store where buying pressures are at their highest and gives us time to think about it a little longer. We noticed that, on some occasions, we chose not to buy that item after settling down and giving it some further thought.

Blow Money

Price limits and the 24 hour rule may seem restrictive, especially for those like me who love to spend. To counter the straightjacket feeling, my wife and I instituted one last practice we like to call “blow money.”

Each month, we allocate a certain amount to our blow money budget category. Each of us receive a certain amount of cash to spend on whatever we like. It’s not a great amount but enough to be worthwhile and last the month if used judiciously.

No accountability for it. No checking with the spouse before spending. No pressure or expectations on where it’s spent.

I love it! And so does the more frugally conscious Mrs.

Once we started this, I found that by freely being able to spend a little on whatever I choose, I was less likely to spend a lot on big-ticket items. It’s as though my craving for spending had been satisfied in the little purchases. Sounds odd but that’s how I felt.

The fun thing is, now that my habits have changed, most months I don’t even use my blow money. But I still get to keep it, and I get more at the beginning of the next month. Several months of non-blow-money-spending and I’ve accumulated a nice amount that could be used for a bigger purchase.

And under the blow money standard we’ve set, I don’t even have to follow the price limit rule or the 24-hr. rule to make that bigger purchase. Nice! (Although I probably would simply out of courtesy and my new found discipline.)

These three practices, along with sticking to our budget, have helped us curb our spending. Consequently, the by-product of spending less is that our savings rate has skyrocketed. I’ll take that any day.

Questions: What is your system of checks and balances to curb spending? Do you have a 24 hour rule on a big purchase? What’s your upper price limit on spending before you would have to discuss the purchase with your spouse?

Image at FreeDigitalPhotos.net

Next Post: 3 Tips For Taking a Charitable Deduction on Your Taxes

Prior Post: Interview With a Centenarian: At 100, My Grandfather Reflects on Life, Faith and Finding Purpose

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Comments

  1. eemusings (NZMuse) says:

    I always like to sleep on things, even the smallest purchases haha. Chronic indecisive here.

    Anything over the amount of T’s allowance/fun money he would obviously have to discuss with me. He’s the spender in our relationship 🙂

    • “Chronic indecisive here.” Yes, but I’ll bet you are saving money. I’d rather be cautious like that…I’ve lived through what impulse spending can do.

  2. The 24 hour rule is a life saver. I have those same impulse feelings, but if I can walk away, they usually go away. An even better rule is to stay out of stores,but even I break that one every once in a while!

    • “An even better rule is to stay out of stores…” That’s true. Something about being in the building stirs up all these emotions. Perhaps we just need to get everything delivered…or just have more discipline. 🙂

  3. I like that you have an account that you don’t have to be accountable for. I think what you resist, persists so if you felt too restricted it could lead to tension. I don’t have any particular system in place…just that I’ve gotten way better about not being an impulse spender…mostly on little items like magazines. Now I just pause a moment to think of alternate things I can read or I can always go to the library and spend a day catching up with magazines for free.

    • “…an account you don’t have to be accountable for.” I’ve got to tell you it’s so much fun. It’s completely guilt and tension free spending. We both love it!

  4. We don’t have any real rules when it comes to spending, but if it’s something superfluous like a lunch out with coworkers, we check with each other. Plus, since we have joint accounts, that also helps keep things in check. But honestly we probably talk about any purchase over $10, even though we usually give the other the go ahead. When it comes to the big purchases though, we spend more than 24 hours… it’s usually like 24 days. The longer, the better.

    • A joint account does help with accountability. If each person has access and can see all the spending that goes on, it leaves nothing to doubt. Open and honest communication about spending is always beneficial.

  5. I love this and have been doing something very similar for my self budgeting. I call it my “allowance” to myself. My other half and I are not married yet so we keep our finances separate. But I think we will keep this once we do budget together. I think it helps keep balance where when you do buy something you don’t feel guilty and helps promote good financial mentality! 🙂

  6. I think it’s good to have those specific rules. Ours are a lot more restrictive – perhaps like yours used to be – just because our budget is so tight and because of our personalities. My husband researches electronics purchases for months, for example. Sharing one car makes communication about spending super easy for us – we practically can’t even go to a retailer without at least letting the other know if not coming with.

    • Your budget tightness will lessen over time as your finances improve. At least I think that should be the goal. It’s been nice to loosen the reins a bit and allow for more spending. That’s part of the freedom that comes by taking sound financial steps.

  7. Six Figures Under says:

    Mparents taught me the 24 hour rule by their example. They always slept on big money decisions (and other decisions, for that matter). My husband and I do the same. I think today we are really nagged to spend our money fast and make decisions that aren’t well thought out, especially with all the daily deals and flash sales!

    • “…we are really nagged to spend our money fast…” It’s a basic ploy of advertising to force immediacy on us. How many times have you been watching your favorite show only to be greeted at the break by a blaring commercial saying things like, “Only one day left…”, “This won’t last forever…”, “Buy now…”, etc. It’s so obvious what’s going on yet we fall for it time and time again. Guess that’s why advertisers do it.

  8. I like taking a few days to consider bigger purchases. The more money, the longer I take. My boyfriend and I aren’t big spenders, and even though our finances are separate, we like to consult each other to make sure we’re making a good purchase. I like your system for blow money! It’s something I’ll consider once my student loans are paid off.

    • It’s been great for us. And like I said, it’s not a lot each month. You could probably budget a little bit for it even with your student loans right now. That being said, it would probably be one of the first things to go out of our budget if I needed money.

  9. I like the 24-hour rule and I think I’ve been following that without actually thinking about it. I tend to talk myself out of large purchases if I think about it for 24 hours or more, which is great. It means that if there is something my wife and I really want that involves a larger purchase we will be thinking about it for days and days, as well as mull over the pros and cons. It helps us only spend money on things of value.

    • If we can just make it away from the store, then we have a chance to implement the 24-hr. rule. Of course, exercising the discipline to ignore the buying emotion and get out of the store is the biggest part of the challenge.

  10. Good post Brian! We loosely follow this, especially with the blow money. We get an allowance each month that we can do whatever we please with. I’ve moved to where I mainly just save it for something I want and my wife tends to do the same. We really don’t have a strict spending limit, but either one of us wouldn’t spend much more than $50-100 without consulting with the other.

  11. We don’t specifically follow any rules like this but just by habit kind of practice them naturally. I think the idea of blow money is especially helpful. Having a little bit of autonomy is nice.

    • Autonomy is nice and probably needs to be something all the gung-ho budget hawks need to understand. Granting your free spending spouse a little autonomy will go a long way in improving their attitude about working on and sticking to the budget.

  12. We use these tips as well, but I don’t call it “blow” money due to its harsh drug connotation! 🙂 I call it play money, but these are all great tips to keep you accountable. I love the 24 hour rule and use it more and more.

  13. Holly Johnson says:

    We don’t have any hard and fast price limits, but I probably wouldn’t buy anything over $50 without talking to my husband first. The only exception would be something that we had to have or something for the kids. We usually think about our purchases for at least 24 hours too….sometimes much longer!

  14. The excitement and limited time for the “cash for clunkers” deal had us so close to making a $20K+ mistake. Fortunately, we also have a policy of sleeping on any big purchases, and we came to our senses. As the stars and rainbows of a new car faded, we came to realize that the trade-in we were offered on our clunker was about the same as the typical new-car discount that we were NOT allowed. Whew.

    • “…limited time…” That’s an incredible advertising technique marketers use to suck us in. We feel like it’s a once in a lifetime opportunity so we get emotional and bite. Advertisers are great at knowing what pushes our spending buttons. Your experience is proof in the power of the 24-hr. rule. Nicely done!

  15. We have a very similar routine of discussing most purchases before shopping. It helps make sure we are on the same page about everything. If we can’t agree about a purchase then we normally hold off on buying whatever it is until we are in agreement.

    • That’s the best route to take Liz. Total agreement is always a good thing. Take it from someone with experience…you don’t want a money purchase driving a wedge in the relationship, causing bitter feelings.

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