The problem with most attempts to get your financial house in order isn't the planning, it's the execution. The finer points of money management may be endlessly complex, but experts insist the basics can fit on an index card. Most of us know we need to spend less than we make, pay down high-interest debt, and start saving for emergencies and longer-term goals.
Sometimes, though, unpleasant surprises or economic realities get in the way of our well-intentioned financial plans. Other times, it's just that we're human and get distracted by shiny new things.
Financial experts alone can't do much to make life less expensive or unpredictable (for that, talk to your elected representatives or perhaps your local union organizer), but they do have plenty of advice to offer to help you get your impulse spending under control. Blog Apartment Therapy recently rounded up a lot of it.
Many of the tips on offer are useful if not earth-shattering (make a list before shopping, try paying for more stuff in cash to really feel the pain of the transaction) but at least one was both new to me and extremely helpful. It comes from wealth adviser Matthew Grishman and it's called the 10-10-10 rule.
An old classic, re-imagined.
You may have come across the 10-10-10 rule before in other contexts. Or, if you're not familiar with this snappy formulation of the idea, you'll probably recognize the underlying principle. Invested by business writer Suzy Welch, the 10-10-10 rule says that before making any decision, take time to ask yourself three questions:
How will we feel about it 10 minutes from now?
How about 10 weeks from now?
How about 10 years from now?
Suddenly, a lot of choices should seem a lot clearer and a lot of anxieties less worth stressing about. It's a classic bit of decision-making wisdom, and according to Grishman, it can be easily and effectively adapted to purchasing decisions too.
Three questions to get you off the hedonic treadmill.
Instead of asking yourself how you'll feel about buying something 10 minutes later, Grishman suggests that, unless you're bleeding and in the pharmacy asking for peroxide and bandages, you should actually wait 10 minutes to make the purchase.
"The first TEN is a pause button. Wait, stop, don't buy this right now. Take ten minutes to put it down and walk away," Apartment Therapy quotes him as saying. "That first ten minutes is the space I need to allow whatever emotion is driving my impulse purchase to come into me and then begin to leave."
If after 10 minutes you're still tempted to pull out your wallet, then it's time to apply Welch's second two 10s. "I can ask myself, 'How will I feel about this purchase in TEN weeks versus TEN years?'" he says.
You may get a range of different answers to these questions. You might, for instance, realize you're reasonably sure that after 10 weeks, whatever you're craving in the shop right now is likely to be collecting dust at the back of a closet somewhere. Hopefully, that image will go a long way towards cooling your desire to buy it.
And what if you reflect and decide that whatever item you want to buy will still hold value in 10 years' time? That depends on the price tag. If you know you can afford it, go ahead and buy it. If you're less sure the purchase makes financial sense, "maybe it's worth reflecting on some more and actually planning for a time when it works within my budget," suggests Grishman.
The point of the exercise is to remind yourself in a visceral way of a psychological fact. Humans get used to just about everything, including nearly every exciting new purchase. After a while, each new convenience and treat blends into the background and stops giving you pleasure (the memories of interesting experiences, however, bring us durable joy). This is known as the hedonic treadmill among scientists. Applying the 10-10-10 rule to your purchases is a way to get you off it.
Will this thing honestly make a difference in your life in 10 weeks or 10 years? If not, save your money to buy something that will.