How to stop impulse buying with the 1% Spending Rule
News Room
Wealth Management
How to stop impulse buying with the 1% Spending Rule
Wealth Management
8/2/2023 10:36 AM

How to stop impulse buying with the 1% Spending Rule

Having the power to walk into a store and buy something you didn’t necessarily plan on is thrilling and gratifying. Who doesn’t love a little spontaneity? But, while that emotional rush pumps through your veins, it disappears as quickly as it came. What doesn’t leave you? The giant purchase you just made.

The good thing is you’re not alone. Many people struggle to keep their purchases in check (our eyes are bigger than our wallets). But, if you want to curb your spending and start making wiser decisions with your money, like investing it into real estate, stocks, or crypto, then the 1% spending rule is something you should follow. 

In this post, we’re going to talk about how to stop impulse buying and regain control over your spending. 

What is impulse buying?

Impulse buying is anytime you make an unplanned purchase. While we’ve used examples of large-ticket items, impulse buying could be as small as buying a chocolate bar or a magazine in the checkout line.

Why do we make impulse purchases?

While you may blame yourself for excessive spending, it’s not your fault. We live in a world that focuses its marketing efforts on getting you to make an impulse purchase. And how do they do that? By playing with our emotions. 

Businesses focus on creating an emotional relationship between you and their product, which usually encourages people to impulse purchase. Scientifically speaking, making an impulse purchase makes us feel good and rewards our brains with dopamine. Businesses use this information to create marketing campaigns that get us hooked.

But there is a way to avoid impulse buying. 

What is the 1% spending rule?

The 1% spending rule will help you learn how to avoid impulse buying and how to control impulse buying. Luckily, the 1% spending rule is simple and goes like this - when you want to buy something that exceeds 1% of your annual gross income, you have to wait one day before buying it. 

This rule also applies when you’re spending money on items you don’t need. For example, you want to buy yourself the latest gaming console. Before you go ahead and buy it, use the 1% spending rule.  

So, let’s say the gaming console is $800. If your annual gross income is $50,000 annually, you will go over the 1% spending cap. So, before you hit the ‘buy’ button, wait an extra day before making the purchase. 

But why wait one day? Impulse buying is all about your emotions. Giving yourself that 24-hour cool down can help you rethink the purchase and see if it aligns with your needs and goals. Do I really want that PS5? Or should I invest that money into stocks, crypto, etc.? 

That 24-hour window could potentially prevent you from spending your money on items that don’t bring you back any return. Whereas, you could use that $800 to invest in the BOTS App - now that’s smart spending.

Recommended: 7 Simple Tips for Saving Money

If you have an income of over $200,000 and your debt is under control, this 1% spending rule may not apply to you (however, it’s not bad to follow). You can also reduce your spending cap if you feel 1% is too high.

However you choose to set up your 1% spending rule, what’s important is giving yourself that extra time to wind down and think about the purchase you’re making. This will help you avoid impulse spending and truly be happy with your financial decisions.


This blog is for educational purposes only. The information we offer does not constitute investment advice. Please always do your own research before investing.

Any views expressed in this blog and by BOTS do not constitute a recommendation that any particular cryptocurrency (or cryptocurrency token/asset/index), portfolio of cryptocurrencies, transaction, or investment strategy is suitable for any specific person.

Get started with BOTS today

Download on the App StoreGet it on Google Play
Download the BOTS app now!
Start trading automatically in just two minutes.