What is the 30-Day Saving Rule?

Saving money isn’t easy, but it doesn’t have to be hard. Whether you’re trying to save up for a home, build up your emergency fund, or even start a rainy day fund, setting aside a part of your paycheque each month to put toward your savings can be challenging, to say the least. Even if you do try to limit your spending, impulse purchases can quickly take a toll on your bank account.

One solution? The 30-day saving rule.

Yep, that’s right. The 30-day savings rule is a simple, easy-to-follow strategy that can help you cut your impulse spending and increase your savings. We’ll introduce you to the rule’s wonders and help you find ways to integrate it into your financial life.

So, what exactly is the 30-day saving rule?

The 30-day savings rule is a simple and effective way to improve your money management.

Here’s how it works: the next time you’re tempted to make an impulse purchase or buy something you don’t really need, just pause. Close your browser window or walk out of the store because you’re not going to buy it—not yet, anyway.

Then, jot down what you wanted to buy, where you can find it again, how much it costs, and the date.

See, the idea is to delay all non-essential purchases for 30 days. Instead of spending your money right away, take a month to think it over. Think of it as a cooling-off period.

During the cooling-off period, while you’re thinking about whether you need the item, ask yourself things like:

• Can I afford to spend that money?

• Can I find a better price for it somewhere else?

• Should I save that money for something more important?

• Will this purchase interfere with my personal finance goals?

After those 30 days, if you still want to buy the item, go ahead. Now, it’s no longer an impulse buy because you’ve had 30 days to really think about whether you need it. But if you find that you forgot about it or decided it wasn’t worth it, you’ll have saved some money. It’s a straightforward way to help you stay on track with your financial goals.

Simple, right?

And here’s a tip: On top of noting the price of the item you wanted to buy, try putting that amount right into your savings account. Watching your savings grow can make it easier to resist those impulse buys. Ask yourself if you really need that item or if it’s better to keep that money in your savings account in case of an emergency. And if you decide after 30 days that you still want the item, your money is there and ready for you to spend.

Why the 30-day savings rule really does work

If this all sounds too good to be true, think again. The 30-day savings rule really does help you save money.

In fact, what makes the 30-day savings rule so special is its simplicity. By forcing yourself to wait on all your non-essential purchases, you take emotions out of your spending so you can maximize your savings.

As you think about your impulse purchase(s) over the 30 days, you’re also putting that money into your savings account. If you still want to buy the item after 30 days, you can take the money out. But if you decide you no longer want the item, that money will remain in your savings account.

While it may help you save enough to quit your day job, the 30-day savings rule is still a great way to help you save money. It simply stops us from spending money impulsively on things that don’t actually make us happy or serve any real purpose. The more impulse buys you avoid, the more money you’ll save. Plus, when you put effort into saving money, spending it on something unnecessary or not in line with your values will become tougher.

And this rule doesn’t have to apply only to big-ticket items. You can also use it for everyday expenses. For example, if you’re tempted to buy lunch every day or a fancy latte every morning, consider making your own coffee or bringing lunch from home. A $7 coffee five days a week can add up to an extra $140 in your savings account after four weeks.

Although we often think that we need a complex multi-tiered investment plan or budgeting rule to build our savings, sometimes all we need is to limit our spending.

How to use the 30-day savings rule to build your savings

Interested in using the 30-day savings rule to help improve your spending habits? Here are three steps you can take to integrate this simple savings plan into your day-to-day life.

1. Identify needs vs wants

If you’re new to the 30-day savings rule, start by distinguishing between essential and nonessential purchases. This will help you determine what’s a necessity and what’s not.

Take a few minutes to list your monthly expenses. Mentally note that these essential expenses get automatic approval under your new savings plan. Everything else is a “want” and should follow the 30-day savings rule.

When you’re out shopping, think about whether your potential purchase is a need or a want, and make your spending decisions accordingly. If it’s an impulse buy, just put your wallet away and save your money for another day.

2. Have a savings account ready to go

One of the great things about the 30-day savings rule is that it helps you build your savings (and earn interest!) while you decide if that pair of shoes or new smartphone is really worth your hard-earned money.

Instead of just leaving your money in your regular chequing account, consider putting it into a TFSA, RRSP, or another high-interest savings account to earn interest while you wait.

To make things even easier, you’ll soon be able to set up KOHO Save and turn your entire KOHO account into an interest-generating machine. This way, all the money you don’t spend can actually make you more money in the short term.

3. Set up an entertainment fund

If waiting 30 days to make every non-essential purchase sounds a bit daunting, we get it.

Waiting a month to decide on big splurges, like a new computer or a vacation, is a solid strategy. But for smaller expenses, like a night at the movies, it might be overkill.

Too many spending limits can make it harder to stick to your resolutions. While the 30-day rule is great for big-ticket items, consider setting up an entertainment fund for smaller expenses that you can dip into guilt-free.

Your entertainment fund can be as big or small as you like. We recommend budgeting a modest amount each week, so your fun doesn’t cut into your savings.

If your monthly budget is tight, try setting aside your cashback earnings for this fund. It might not seem like much now, but with the cashback benefits you can earn from your KOHO account, you’ll be surprised how quickly it adds up.

What is impulse spending?

Impulse spending is when you buy something on a whim without really thinking it through or needing it. It’s that quick decision to purchase because something looks appealing at the moment.

While it might feel good right away, impulse spending can hurt your finances in the long run. It can mess up your budget by taking money away from essential expenses or important financial goals. It might lead to more debt and less savings, eventually putting a strain on your financial well-being and mental health, causing feelings of guilt, regret, and stress as you try to manage your money.

Using the 30-day rule can help with curbing impulse spending. This rule gives you a cooling-off period to reflect and approach spending more intentionally. It helps you figure out what you really need versus what you just want on a whim, reducing buyer’s remorse.

What is delayed gratification?

Delayed gratification, or deferred gratification, is all about resisting the urge for immediate pleasure in hopes of getting a more valuable and lasting reward later on. In simpler terms, it’s when you hold off on an immediate reward because you know waiting will bring you something better in the future.

Studies have even shown that delayed gratification is a common trait among successful people. Those who can wait for the right time to enjoy something tend to do better financially in their relationships, careers, and even their health compared to those who haven’t mastered this skill.

It’s not always easy to wait when something feels good right now, but the rewards can be much bigger in the future. As you practice this, it can boost your self-control and help you achieve your long-term financial goals, like buying a home or even retiring early.

What is the difference between a need and a want?

Think of needs as your basic living expenses—the essentials for daily life. For example, if you’re out of toilet paper or toothpaste, those are needs and don’t fall under the 30-day rule. Sure, you can look around for a better price, but they’re still necessary purchases.

The same goes for filling up your car with gas if you need to drive to work in the morning. Or if you need to eat dinner and your cupboards and fridge are bare, you need food. Another example of a need would be paying your utility bill, as you need water and electricity.

On the other hand, wants are things that aren’t essential for daily survival. Groceries to cook dinner are needs, but an expensive steak dinner or that $7 latte definitely counts as wants.

When you’re shopping, you might give in to your wants by picking up a new sweater or jeans just because they’re on sale or even upgrading your phone or tablet even though your current one works fine.

Perhaps a holiday is just around the corner, and you’re looking to pick up new decor for your home. These are all things you want and not things you need.

Tips for using the 30-day savings rule

To make your 30-day savings experience as effective as possible, try these tips:

Create a wish list

Whenever you’re tempted to make an impulse purchase, jot it down on your wish list. This simple act can be surprisingly effective. You might find that after waiting 30 days, your desire for the item has lessened or disappeared altogether.

By waiting to purchase something on a whim, you're making sure your money is spent on things that truly matter to you.

Boost your savings

Instead of letting your money sit in a regular savings account, consider transferring it to a high-yield savings account. These accounts offer higher interest rates, which means your money can grow faster over time. Watching your savings balance increase more quickly can be especially motivating.

Prioritize your financial goals

Take some time to compare the items on your wish list to your other financial goals. Ask yourself whether the immediate satisfaction of an impulse buy is worth more than achieving your long-term financial goals.

For instance, would you rather spend your money paying off credit card debt, building an emergency fund, or saving for a significant purchase like a new car? When you prioritize your goals, you can stay focused on what’s most important to you.

Use a budgeting app

A budget is simply a plan for your money, and using a budgeting app can make creating and sticking to a budget much easier. A great example is the KOHO app. It provides insights into your spending habits and can help you identify areas where you can cut back.

It also offers features like goal setting and expense tracking. By tracking your spending in the KOHO app, you’ll be surprised at how much easier it is to live within your means.

Treat yourself occasionally

Remember, the goal of the 30-day rule isn’t to stop you from ever buying something you want again—it’s about helping you become more aware of your spending habits. So, to help you stick to the 30-day savings rule and stay motivated, don’t be afraid to treat yourself once in a while!

This could mean buying that $7 coffee once or twice a month (instead of every day!), going out for lunch with friends, or indulging in a small luxury that fits within your budget. Treating yourself once in a while will help prevent feelings of deprivation and make it easier to continue managing your new spending habits.

Other money-saving tips and strategies you can try

Saving money can be tough for a lot of people. That’s why having a structure like the 30-day challenge can be so helpful. It’s a great way to kickstart your savings habit, giving you a clear goal to save as much as you can within a month.

But if the 30-day savings rule doesn’t quite work for you, here are a few other money-saving ideas you might want to try:

Pay yourself first method

The pay-yourself-first method encourages you to save money before you spend it. By directing a portion of your paycheque into a savings account first—essentially paying yourself before anything else—your savings will grow. By adding to your savings right after you get paid, you’ll find that your monthly spending naturally adjusts to what’s left in your regular chequing account.

The 50/30/20 rule

The 50/30/20 rule is a budgeting method where you split your after-tax income into three main categories: 50% for needs, 30% for wants, and 20% for savings and debt payments. This rule is designed to help you manage your take-home pay, ensuring you have money set aside for emergencies and retirement savings.

The cash-stuffing envelope method

The envelope method is a budgeting method where you physically divide your monthly income into different spending categories using envelopes. Basically, you take a few envelopes and label each one with a specific expense category, like groceries, rent, dining out, or entertainment. Then, put the cash you plan to spend on each category into its envelope.

Then, when you need to pay for something, use the money from the corresponding envelope. For example, if you have $50 in an envelope marked “coffee” and buy a $7 latte, take the money from that envelope. You’ll have $43 left for coffee for the month.

You can refill your envelopes once a month or after you get your paycheque. Once you run out of money in an envelope, you can’t spend more in that category until you refill your envelopes. This method helps you fully understand where your money is going and rebuild healthier spending habits.

Saving your spare change

This savings method is exactly what it sounds like—saving your spare change. Every time you buy something, you take the change you get back and put it into a jar or piggy bank.

But what if you don’t use cash? Don’t worry, we’ve got you covered there, too. You can use round-up apps, like Moka or Wealthsimple, to round up your purchase to the nearest dollar and deposit the difference into an investment account. After a while, you’d be surprised how much you have saved up!

Wait 30 days and watch your savings grow with KOHO

The 30-day savings rule might sound too good to be true, but waiting 30 days before making an impulse purchase can truly save you a lot of money in the short term.

When you combine this rule with a solid budget and the great savings tools from your KOHO account, the 30-day savings rule can really help you reach your financial goals.