Mindful Money Habit #1: The 10x10x10 Rule

Trailhead Planners LLC |

To kick off our series of mindful money habits, we start with the 10x10x10 Rule. I recently heard about this rule as a tool to facilitate quality decision making and avoid short-term, or myopic, thinking. I immediately saw how it could be harnessed tomake better financial decisions that are reflective of your values and help you achieve your goals.

Money is Emotional

Though we often think of finance as the realm of the rational, where only those armed with calculators and Excel spreadsheets may tread, money decisions are riddled with emotion and behavioral biases. This is not good nor bad, it simply is. However, what is bad is that we often refuse to acknowledge this reality.

An online spending binge is often the result of being emotionally drained, stressed out, or having decision fatigue set-in. You've convinced yourself that you need something, and you feel intensely about it in the moment, but a few weeks later it has already been cast-aside, hardly used.

Similarly, if you've ever opted-in to the 'maybe too expensive apartment, house, or other living situation' because you absolutely, positively must have it - you made an emotional decision, not a rational one - (that isn't to judge the outcome however, simply the process).

In these types of scenarios, the 10x10x10 Rule can come in handy to get you in the right frame of mind for mindful money decisions.

How does the 10x10x10 Rule Work?

The 10x10x10 rule works like this. Anytime you are faced with a decision where there are long-term ramifications to your health or wealth, ask yourself the following:

  1. How will I feel about (this decision) in 10 days?
  2. How will I feel about (this decision) in 10 months?
  3. How will I feel about (this decision) in 10 years?

As you consider this, you can see the power inherent in the prompts. Making us think in different time horizons takes us out of the momentum of the present moment, and asks us to look back from different vantage points that inevitably shift our perspective.

How can we apply this to money?

When confronted with a financial decision, whether large or small, we can use this tool to ensure we are using our financial resources mindfully. As we know, it can be challenging to do so in the moment, when we are confronted by a financial decision or potential want, but our brain is tired, stressed, or distracted by other things.  The 10x10x10 tool is a quick and easy standby to shift our present perspective and ensure we are in a healthy frame of mind for financial decisions.

More, because there are different durations to our money decisions, we can change the time involved. Here are two examples:

When confronted with the decision to either contribute $400/month to your employer 401(k) plan or to use that money to lease a nicer car.

  1. In 10 days, if I don't lease the car I might feel regret that I'm still driving my old Camry and not a fancy new Prius and will feel largely neutral about the $400 contribution.
  2. In 10 months, I will be grateful that I've contributed an extra $4,000 to my retirement account, while my Camry continues to get the job done. More, I'll be grateful that my tax deductible 401(k) contributions lowered my tax bill. Woohoo!
  3. In 10 years, I will be grateful that the extra $14,400 I contributed to my 401(k) over three years (versus a hypothetical 3-year lease) has turned into roughly $23,600 when computed at a moderate 6% rate of return (not counting any contributions beyond year 3 nor any employer matches which both would only serve to increase the end balance!).

When deciding whether to hit 'Order' on that huge cart you just cued up at Amazon.com:

  1. In 10 minutes, I'll feel a little rush due to all the cool things that will be on my doorstep tomorrow.
  2. In 10 hours, I'll be feeling guilty about the $200 I just put on my credit card, though I'll still be anticipating my purchased items.
  3. In 10 days, I'll already feel indifferent about everything I bought and I'll be mad at myself for overspending my budget.

In the initial example, we can see that the $400 lease results in the 'loss' of over $23k in only three years. My guess is that in 10 years you'll value the added financial security over the fancier car. In the second case, we can see that the 'spending high' wears off quickly. Of course, there is the initial rush, but that quickly devolves into indifference at best, and guilt, shame, and financial hardship at worst.

To End

I often say that 2/3rd of successful personal finance is delayed gratification (Having a great Financial Life Plan in place is the first 1/3rd). The 10x10x10 rule can help us achieve our long-term goals when our very normal emotions and stresses dampen our ability to good decisions.

Next time you're about to make a purchase, whether large or small, run though these prompts in your head. You might find yourself making more mindful money decisions right from the start!

Now for my next decision, in 10 minutes how will I feel about the cookie I want to devour at my favorite coffee shop?