Use the ‘$1 Rule’ Before Making an Impulsive Purchase

If I have one recurring thought leading up to the holidays, it’s got to be me looking through my shopping tabs and wondering, “Do I really need this?” And when I’m feeling more generous, “Is this actually a good gift?” The one thing that puts my mind at ease: a little math. Enter the “$1 rule“—a simple, practical strategy to make smarter spending decisions and avoid buyer’s remorse.

What is the $1 rule?

The $1 rule is a straightforward cost-per-use calculation that helps you determine whether a purchase is truly worth the investment. The principle is simple: Aim to spend no more than $1 for each time you’ll use an item. Before making a purchase, honestly estimate how many times you’ll use the item. Then divide the total cost by the number of anticipated uses. If the result is $1 or less, it’s likely a worthwhile purchase. Let’s take a look at how you can apply this rule.

When the math checks out

Take a beat to truly reflect on what you’re about to buy. Ask yourself questions like: “Do I really need this?” “Will I use it often?” “Does it align with my values and goals?”

• A quality work chair: $500 ÷ Daily use (250 work days/year) = $2 per use per year (but you’ll likely have it for more than one year)

• Comfortable walking shoes: $120 ÷ 300 uses = $0.40 per use

• Durable winter coat: $250 ÷ 100 uses per year = $2.50 per use per year (but you’ll likely have it for more than one year)

When you should probably pass

Think honestly about when an object isn’t a true investment.

• Specialty kitchen gadget: $80 ÷ 4 uses per year = $20 per use

• Decorative serving platter: $60 ÷ 2 uses per year = $30 per use

• Trendy fashion piece worn once: Full price ÷ 1 use = Poor investment

Of course, if you decide that specialty gadget is worth $20 per use to you personally, then there you have it! It’s all about knowing your money values and what you’re willing to spend.

Even if you don’t do the math for every purchase, the takeaway here is about practicing mindful spending. Focus on longterm utility over impulse desires, so you can better avoid buyers’ remorse. Take time to compare prices, read reviews, and investigate alternatives. This not only helps you find the best deal but also ensures you’re getting a quality product that meets your needs.

Some final tips for using the $1 rule in action: Be realistic about usage frequency. Factor in quality and durability of your purchase. After all, cheaper isn’t always more cost-effective. The $1 rule isn’t about being cheap—it’s about being smart. By considering the true value of your purchases, you can shop with confidence and reduce financial stress.