The 10-10-10 Rule for Spending

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The April issue of Glamour Magazine features a short piece by Suzy Welch explaining the theory behind the 10-10-10 rule. The rule is simple: before you make a decision, ask yourself: “What will the consequences of my options be in 10 minutes, 10 months, and 10 years?” Then act accordingly.

In her example, she describes a time she took her 2 young kids on a business trip to Hawaii, and it ruined the trip for everyone. If she’d thought about it, her kids would have been unhappy for ten minutes, but the closing the deal would have made her enough money to take them on vacation in 10 months, and in ten years they’d only remember the great trip, not her three-day absence.

Applying the 10-10-10 Rule to Spending

That started me thinking: how could I apply this rule to purchases, both big and small. For example, buying tickets to the Billy Joel/Elton John concert. In ten minutes, I’d have the concert to look forward to. In ten months, I’d have this great memory of this fantastic concern. In 10 years, I’d still have a great memory of a fantastic concert by two men who may not be touring in ten years. Is it worth it? Yes!

Now let’s try another – buying a cheap pair of shoes that are trendy now. In 10 minutes, I’ll have a cute pair of shoes. In 10 months, I’ll have a pair of shoes that are going out of style and may have worn out already. In 10 years, I won’t have the shoes. Was it worth it? Not to me. I don’t expect a pair of shoes to last 10 years, but I certainly want them to last more than 10 months.

Why It Works

Applying the 10-10-10 rule is simple because it relies on your gut. If you have to spend a lot of time thinking of answers to each question, then that’s probably your answer right there. Of course, you can apply the question to major decisions, like: should I buy a car now or wait to save money for a larger down payment? If I buy now, in 10 minutes I’ll have a shiny new car and big car payments. In ten months, I’ll still be making large car payments. In ten years, I’ll be ready to replace it, but will have less money saved for the next car.

If I wait, in 10 minutes I’ll still have a car I hate, but no car payments. In 10 months, I’ll have saved up enough money for a large down payment, or maybe even a whole car. In 10 years, I’ll have one more year before it’s time to replace the car, and more money in my savings. Waiting is clearly the better option in this case.

The rule doesn’t necessarily apply to the most basic purchases, but if you’re trying to learn to control your spending or deciding how to prioritize your time, this is a great tool to rely on until the new habit becomes a habit. You could even ask yourself about your time-wasters. For example, should I watch the new episode of Heroes? In 10 minutes, I’ll be either amused or ticked-off by the show. In 10 months, I won’t care. In 10 years, I’ll barely remember it. Hmmm… maybe it’s time to give up on that show.

Do you use any tools like this? How do you weigh your financial choices?

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