How To Spend on Splurges
“More Money, More Problems”
- Notorious B.I.G.
- Michael Scott
Biggy and Michael got it right.
Going from broke college student to salaried professional can be jarring. Suddenly you’ve got money to spend that you’ve never had. Then come the promotions and raises, and that adjustment keeps going.
When the dollars start flowing, most people fall into one of two camps:
- Big Spender: Your lifestyle grows as fast as your paycheck.
- The Big Saver Who Can’t Start Spending: Even when you can afford something, you hesitate.
Both have downsides: Over-Spenders delay building real wealth; Under-Spenders miss out on enjoying the rewards of their work.
Where’s the balance?
Enter the 0.01% Rule
Made popular by Nick Maggiulli at Ritholtz Wealth Management, this rule says you can spend 0.01% of your net worth per day, guilt free.
Grow your Net Worth to $100,000? Never let a $10 app at dinner phase you again.
Net worth $50,000? Confidently grab that $5 coffee, judgement free.
“Chris, you’re saying even as a millionaire I can only spend $100?”
Not at all.
This isn’t about planned expenses like rent, groceries, vacations, and car repairs, those have their own budgets (I’ve got a whole other newsletter for that one).
This is for the small, daily choices that sneak into your head:
- Should we DoorDash dinner?
- I like this shirt more, can I splurge?
- You know what? I will add guac
The 0.01% rule gives Natural Savers permission to spend their hard earned money, and Natural Spenders guardrails to help keep it.
Why is this even needed?
Because lifestyle inflation is real.
As your income continues to grow, it’s important to learn how to convert it into net worth.
And we're bad at making that conversion.
Your Income (money you earn from work) can disappear overnight with layoffs or career shifts.
Your Net Worth (your savings, investments, and assets) is your true financial foundation.
The .01% rule helps you enjoy your money now while keeping your eyes on the prize: growing your net worth.
Want to splurge more? Great! Get more money into your investment or savings to grow your guilt-free number.
Your current and future self will thank you.
Why does this work?
Thanks to something called the 4% Rule.
The 4% rule says you can spend 4% of your net worth per year and theoretically never run out of money. That’s because, historically, investments grow more than 4% over the long term.
It’s often used for retirement math:
- $1M net worth → $40k/year spending limit without depleting your nest-egg.
The .01% rule is just the daily version:
- 0.01% per day → 3.65% per year (and that’s assuming you spend it every single day).
Money is a tool, not a scoreboard
The 0.01% rule makes sure you use money to both build your future while still enjoying some fruits of your labor now.
What's your 0.01% number? Take your net-worth, divide by 10,000.
Enjoy!
