The Second Philosophy: The One Month Rule

Financial Planning for Doctors

We all know the feeling. You purchase something in a moment of brilliance that you have to buy. You think it’s great. Surely, this new (insert: financed car/home, expensive clothes, computer, etc) is going to make you happy. It’s the best thing since sliced bread. Then it hits…. buyer’s remorse. That purchase you thought would make you so happy has now turned into a constant reminder of your poor financial decision. This is where the Second Philosophy of Becoming Moderately Frugal plays a role: The One Month Rule

Money and Happiness

Three Car Seats
Want an application of The One Month Rule in my life? I waited about six months before I ordered a car that I would both enjoy driving and that would also fit three car seats. Not an ounce of buyer’s remorse on this one.

We would like to think that spending money is linked directly to happiness. Surely, the things we buy bring us joy. The problem is the implicit assumption that we are good at determining what makes us happy. Unfortunately, this is not the case. In the book “How to Think About Money” the author discusses how people are simply not good at predicting what makes us happy. We also have a knack to follow our Hunter-Gatherer ancestors and consume whatever is right in front of us, including purchases.

In addition to this, we are often prone to spend money on things rather than on people we care about or on experiences that allow us to spend time with the people we care about. These things are unlikely to provide us real happiness, unless it is something we are passionate about and really enjoy. The question becomes this, how do we determine if something is actually going to make us happy? Give the car a test drive? Borrow a friend’s?

Again, this is difficult to pin down, but I have found one trick that helps me prevent buyer’s remorse: The One Month Rule.

The One Month Rule Explained
When you want to make a purchase of financial significance, wait at least one month after wanting to buy it.

The purpose of The One Month Rule

The one month rule helps accomplish wealth and wellness in several ways. However, most of them boil down to the following:

  1. It prevents buyer’s remorse. If you spend a month thinking about a certain purchase and have discussed it with family/friends that you trust for financial advice (and you still think it is a worthy purchase), you are much less likely to regret your purchase.
  2. It helps you make sure the purchase is really worth it. Research the product to make sure you are purchasing the best product for the best price. It is human nature to see something in front of you and to buy it right then because you don’t want to pass the opportunity up. Usually what is passed up in this situation is the best price on the best product. You need time to shop around to make sure your worthy purchase is up to snuff.
  3. It allows you to put it in the budget. It allows you to see its effect on your income stream and the money that could be going towards destroying debt or aggressively investing towards your future.
  4. Take the amount of money that you would be spending and put it into a calculator earning 7% compounding interest growth each year until the year you plan to retire. For example, if it is a one time purchase of $2000 and you plan to retire in 25 years. That $2000 purchase (if invested) would amount to about $11,000. Will the future you think that purchase is worth it? I don’t know, but one month will give you time to think about it!

In the end, The One Month Rule is really all about giving you time to prevent your natural human tendencies that encourage you to purchase unnecessary items right then. These tendencies battle your self control and tell you that you can afford this right now. The One Month Rule makes you prove it is a good and worthy purchase that will produce either wealth or wellness. Hopefully, it’ll provide both!

What do you think? Do you make yourself wait at least a month prior to a major purchase? What defines a major purchase in your eyes? Do you struggle with compulsive buys or is frugality something that comes naturally to you?


4 thoughts on “The Second Philosophy: The One Month Rule”

  1. Desiring something engages the dopamine circuitry. Owning something not so much. What owning something does is make you desire the dough you spent therefore engaging the dopamine circuitry.

    When I was buying a house I wanted a house that the average guy could buy if I wanted to move. The agent showed me every luxury joint on the market since her commission was based on the purchase price. In the end I found my own deal, exactly what I wanted. Her parting words were “well you bought what you told me you wanted”. The value of my house has doubled not so with the “luxury joints”

    The lesson is simple understand your neurochemistry and don’t allow yourself to be manipulated by it. One month allows the neurochemistry tof desire to decay. Good advice!

  2. This is so true. The excitement of a purchase is very short lived. I am getting much better than I used to be in terms of compulsive buying… I don’t do it. People consider that I am miserly, but the reality is we don’t need half the things we buy. I always ask myself do I REALLY need this. Most times the answer is no.

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