The '$1 Rule': Your Secret to Guilt-Free Shopping - Here's How

Learn how the '$1 Rule' can help you shop guilt-free. This simple strategy involves evaluating your purchases to ensure you're getting true value for every dollar spent. By applying this rule, you can make mindful decisions, avoid impulse buying, and stick to your budget, all while enjoying a satisfying shopping experience without the guilt.

When Bernadette Joy earned her MBA in 2016, she and her husband faced about $300,000 in debt, including student loans and mortgage balances.

By 2020, they had successfully paid off their debt.

As Joy pursued financial independence, the conventional financial advice she came across - "eat beans and rice, don’t have fun, and avoid shopping" - didn’t resonate with her. Instead, Joy found creative ways to shop without feeling guilty. This led her to develop a strategy she calls “The $1 rule,” which she explains in her new book, Crush Your Money Goals.

“The $1 rule is my take on cost per use or cost per wear,” said Joy, a financial coach and debt repayment expert. “I simplified it to say it’s fine to buy something if the cost comes out to $1 per use.” For instance, when a friend considered purchasing an expensive couch, Joy applied the $1 rule to show it would be worth the investment if the couch was used daily for five years.

This rule has also helped Joy avoid purchasing low-quality items or things she wouldn’t use frequently. She had considered buying a warming dish for entertaining, but realized the $30 cost didn’t justify the two times a year she would likely use it. The "$1 rule" can also be particularly useful during the holidays when trying to find gifts people will truly enjoy, Joy noted.

Joy explained she uses the rule when buying gifts for others, asking herself, "Is this something they will use often?" Impulse buying can lead to regrets. This year, the National Retail Federation forecasts that a record 183.4 million people will shop both online and in-store between Thanksgiving and Cyber Monday.

According to a recent survey by the National Retail Federation, more than half of shoppers (57%) plan to take advantage of sales during this period due to irresistible deals. Good deals can trigger impulse buying, as highlighted in recent research by Bankrate, which found that 54% of adults made at least one impulsive purchase last holiday season.

However, these unplanned purchases can lead to regret. A separate Bankrate survey on online shopping driven by social media found that 57% of consumers regretted at least one of their purchases. It's okay to indulge occasionally, as long as it’s planned for within your budget, said Ted Rossman, senior industry analyst at Bankrate.

“You don’t want to still be paying off this holiday season a year from now,” Rossman added. In fact, 28% of people are still paying off credit card debt from the 2023 holiday season, according to NerdWallet. Overspending remains a challenge for many households, as prices have risen by 20% since early 2021, while wages have increased by only 17%, Rossman noted.

Although interest rates have decreased, the average credit card rate is still around 20.4%, he added. To help avoid carrying credit card debt, Rossman suggests taking a moment to pause before making a purchase. Additionally, other shopping strategies can help you make the most of your money this holiday season.

Choosing experiences over material gifts can make the holidays more memorable, Joy said. For example, instead of a traditional “Secret Santa” exchange, friends could organize a group outing. Despite retailers’ pressure with time-sensitive deals, “there’s a good chance there will be another sale right after,” Rossman advised. When making a purchase, it’s crucial to check whether the total cost fits within your budget, especially if you’re using installment plans like buy-now-pay-later, Rossman warned.

He also suggested comparing prices to ensure you're getting the best deal. Price tracking tools like CamelCamelCamel for Amazon can help you see how a sale compares to past prices.

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Source: CNBC‍