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The Five Dollar Rule

Updated on April 9, 2018
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Jack is a volunteer at the CCNY Archives. Before retiring, he worked at IBM for over 28 years. As of 2/2020, Jack has over 100,000 views.


I came across this simple rule recently and found it makes a whole lot of sense. It is so easy to be caught up in the moment and be distracted by bargains...The old adage is true, time is money. When it comes to the small stuff, sometimes it makes sense to just give in.

- Apr. 2018


The rule is so simple and the 5 dollar is just a symbol and could be replaced by any amount you feel comfortable given your fiancial station in life.

Simply stated, it is not worth the time and effort to decide whether to spend an item that cost around $5. Since most people work at a job that pays 10 dollars or more, the $5 represents 30 minutes of your productive time. That is to say, don’t fret over an item that cost $5 or less when you can use the time better doing more productive things or even something you enjoy.

For example, one common practice is to shop for the cheapest gasoline. Since Costco usually is cheaper by about 10 cents per gallon, a full tank will save you about 2 dollars. Think what you have to do to save that $2? Drive to a Costco, and wait on a long line... Do you see the point? Is time waiting on line worth the saving?

Another common practice is to use coupons when shopping. That means you need to clip the coupons, save it and organize it in some fashion and plan your shopping so that you take advantage of that savings... I have heard stories of extreme coupon shoppers who were able to buy hundreds of dollars of groceries and pay very little or in some extreme cases get money back. It sounded fantastic until you realize some of the items purchased were not needed and the time and effort was not accounted for.

Why Is This Important?

It is important to follow this simple rule because life is complicated. We are often distracted and there is never enough time. Any way we can simplify and save time is a bargain. Also, we live in a consumer orientated society. We are constantly bombarded with ads and enticements. Gimmicks such as buy one get one free, or heavy discounting are designed to get us to buy things we may not need or want. The same goes with money back guarantees. Most are not worth the paper they are printed on. They know once we buy, the chance of returning a product is almost nil. The latest is the free shipping offer. Amazon has perfected this by offering a prime membership which provide members with free shopping on most items. That is a great marketing scheme.

Think about it, is it really free? Someone has to be paid. Who pays for the delivery man, the truck he drives and the gas he used to get the product to your door? The consumer always pay, one way or another.


In summary, this rule is one that goes along the same philosophy as keeping things simple. A binary decision based on cost. If a cost is less than a certain amount, don’t spend time deciding and just do it. You will be happier in the long run. It may seem contrary to the old adage of Ben Franklin - a penny save is a penny earned. Guess what, it isn’t. If you account for inflation, a penny in the day of Franklin would be equivalent to $5 today.

The Five Dollar Rule explained

© 2018 Jack Lee


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