Are Small Purchases a Big Deal? Try the .01 Rule to Decide
Ever catch yourself stressing over a five-dollar decision? This video challenges the idea that every small purchase deserves the same level of attention. It offers a simple way to think about everyday spending in the context of your full financial picture. Watch to see how this mindset can make money decisions feel less heavy.
Topics Discussed:
Stressing over small purchases
Introducing the 0.01 rule
Spending relative to net worth
Why subscriptions deserve scrutiny
Aligning spending with values
Transcript
Hey everybody, Russell Rivera, founder and president of Voice Wealth Management, and welcome back to this month's Sidewalk Talk. So today I wanted to talk about, try and make decisions about little spending, right? Every time you go out, you make a little purchase of going to get coffee or maybe getting a new subscription of some sort, any sort of little payment that you make. And sometimes people are concerned that those things will really damage their budget or their long-term goals. And then some people obviously are like, you should never spend on anything absolutely unnecessary, and find a way to do everything as inexpensively as possible.
Well, I kind of have this rule that seems to work for me, and that is what I call the 0.01 rule. So what does that mean? So if you have a purchase that you might want to make that's less than 0.01% of your net worth, go ahead and make it. It's really not much to worry about. So long as you have a dedicated and disciplined savings plan, you're going to be fine. Obviously, these spending things can add up, but on any individual sort of expense, it shouldn't be a big deal.
Now, what does that really mean? Well, if your net worth is $10,000, 0.01% is $1—everything matters. You really have to be very disciplined and very careful about what you spend your money on. If you have a million dollars is your net worth, then the question is about a hundred dollars, would be where you really start having to think about it. So obviously, you can do the math in your own head for you, but also you have to be careful. Something that's a subscription for 3.99 a month is not a $4 subscription. It's $50 a year, and that's where we need to really look at it and see whether it's really worth it. Because what ends up happening, right, is all these little subscriptions end up mattering, and you want to make sure at some point that the spending that you're doing really matches your priorities, your values, and of course your long-term objectives.
So if you have any questions about this idea, please reach out, give us a call at Voice Wealth Management, and we look forward to helping you, scheduling a consultation, and seeing how to make your budget match more with what your goals and values are. So Russell Rivera, Voice Wealth Management, this is Sidewalk Talk. Thanks, and see you next time.
Russell D. Rivera, CFA, CFP®, is the Founder and President of Voice Wealth Management, an independent financial services firm serving professionals, entrepreneurs, and families in New York City and beyond. Focusing on helping clients make informed decisions about saving, investing, and financial planning, Russell is committed to providing a customized approach that reflects each client’s unique priorities and experiences.
