The ’24-Hour Rule’ Helps Retirees Save
These days, it’s easier than ever to make an impromptu purchase. You can have items delivered to your home in a day with just a few clicks on your phone or laptop. And while reckless spending can burn a hole in your wallet at any time, it can be very risky to buy big things without proper planning when you retire and don’t have a paycheck anymore.
Enter the 24-hour rule, a savings strategy that involves waiting 24 hours to buy non-essential items. Here’s what you need to know.
The 24 hour rule explained
Most people are no strangers to the temptation to buy outright. Whether you realize that your cooking will be easier with a high-quality kitchen appliance, or you see a new pair of shoes at the mall that would fit you perfectly, it’s easy to whip out a credit card without thinking twice.
The 24-hour rule requires you to think about each purchase before committing to it. You can do this by delaying the purchase for one day which can help you decide if you really need to buy something or if you are acting impulsively. In most cases, the impulse to buy is fleeting.
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Effect of the 24-hour rule
You might not think twice about a quick $30 purchase – but making that purchase twice a month adds up to $720 a year.
If you extend that calculation even longer, your spending could be huge. But if you use the 24-hour rule and end up making a few of those purchases, the savings can be significant, too.
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Adjusts for the 24-hour rule
As with most personal finance rules, it’s important to tweak this rule so it makes the most sense for you.
Maybe you need to wait 72 hours to make a purchase, or apply rules about how long you wait for certain expenses, such as 24 hours for items under $50, 48 hours for those over $75 and 72 hours for those over $100. For some people, shopping online is more tempting than picking up essentials in a store, and they may want to apply this rule only when shopping at home.
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You can also add restrictions that will help you not hit “buy” right away and instead wait 24 hours, such as not keeping your credit card information saved on your devices.
When you retire, you want to enjoy the hard-earned money you saved during your working years. But applying this simple rule can be the difference between running out of money and making it last.
