Millionaire Money Coach Recommends This ‘$1 Rule’ To Curb Spending and Stay Out of Debt

Getting and staying out of debt can be challenging, and you might be tempted to go to extremes — like cutting out all discretionary spending — to get out of it. In reality, commitments like this never stick for long because they’re too difficult to abide by long term. Millionaire money coach and Forbes contributor Bernadette Joy offers a more reasonable approach to curb spending — what she calls the “$1 rule.” Here’s how it works, and how you can use it to actually take control of your spending.

What Is the $1 Rule?

Joy explained how the $1 rule works in a column for Forbes. “The rule is easy to implement starting today,” she said. “You can buy an item as long as it comes out to $1 or less per use.” Joy gives the example of how this would work when deciding whether or not to purchase a $200 handbag. “A handbag you use for work every day that costs $200 could fit the $1 rule if you use the bag every day for a year,” she said. However, a cheap shirt that costs $10 that you plan to wear once and never again would not fit this rule. Joy recommends using this rule when you are purchasing items like clothes, accessories, home goods and gifts. “It works well for the items that often are impulse purchases, and it forces me to stop and think about how frequently I’ll use something, and how long I will realistically keep it before I buy it,” she said. Taking that extra moment to stop and think about whether or not a purchase is actually “worth it” can prevent you from overspending and keep you on track to meet other financial goals.

$1 Rule Can Remove the Guilt From Spending

In addition to helping curb impulse spending, the rule can help remove the shame about spending that some people may feel. “I often coach women who feel guilty for spending money,” Joy said in the column. “They get so focused on how much things cost, rather than how much utility they would get that they become afraid to spend money at all, especially if it’s for themselves.” The rule can be particularly effective for rationalizing the purchase of big-ticket items, like furniture and tech items, that you know you will use frequently. It also encourages the purchase of high-quality items, as they tend to last longer so their cost-per-day will ultimately be less. “Before the $1 rule, I would buy cheaper furniture to fill up space. I didn’t appreciate the reason why the furniture was cheap: It doesn’t last long,” Joy said. “With the $1 rule in mind, I didn’t second-guess buying a more expensive couch and a higher-quality bed. My new bed cost more than $1,000, and I thought, ‘Is it worth $1 per day to have a bed that I can sleep well in for the next three years?’ Expensive items feel different when you consider them from a per-use point of view versus a total dollar amount.”

Exceptions to the $1 Rule

Joy noted that not every purchase will fit into the rule, so she recommends choosing three categories that you will always allow yourself to splurge on. These will typically be experience-based purchases. For Joy, those three categories are concerts, theater and travel — and she notes that sticking to the $1 rule for other purchases helps her save money for these splurges. “The $1 rule is my way to save money toward K-pop concerts, musical theater and international travel,” she said. “These exceptions were in place even when I was working on paying down debt because if I tried to cut those things out back then, I would likely give up on budgeting and saving money.”