Your Money Rules Need an Expiry Date

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The rat that won’t eat oats

Somewhere under a farm shed there’s a rat that won’t eat oats.

It ate them once. Only a little, because that’s what rats do with anything unfamiliar. They take a tiny mouthful, then wait, sometimes for hours, to find out what happens next. What happened next that day was several hours of feeling appalling. The rat survived. The bait had been treated, the dose was slightly off, and the animal lived to be sceptical about it.

It hasn’t touched oats since. Not the treated ones. Not the clean ones sitting in the feed bin twenty metres away. Not the ones a farmer scatters two summers later while wondering why this particular rat keeps walking past perfectly good food while its cousins tuck in.

Scientists call this bait shyness, and it’s one of the fastest bits of learning in the animal kingdom. Most learning takes repetition. This takes one exposure. The psychologist John Garcia spent much of his career on it, and what he found was that the connection between eating something and feeling sick afterwards can be forged from a single unpleasant experience and can hold for the rest of an animal’s life.

Nobody would call the rat stupid for this. The rule saved its life. It cost one dreadful afternoon and bought years of not dying, which by the arithmetic of survival, is a pretty good deal.

There’s only one flaw in it. The rule has no expiry date and no way of checking itself. The oats changed. The rat’s rule didn’t. And because the rat never eats oats, it will never find out that the oats are fine.

Rules that got grandfathered in

You’re running rules like this. So am I.

Not about oats, but about money. Small private policies that you don’t remember writing and never consciously decided on, which nonetheless decide what you’ll do with your money on any given day.

Never buy anything on credit. Avoid debt at all costs. Always take the cheapest option. Don’t check the balance after a big weekend. Don’t ask what other people earn. If you can do it yourself, do it yourself. Never put money in the market, because it’s a casino. Never bring up money at dinner.

In law, when a rule changes, the arrangements that already existed sometimes get to carry on under the old rule. We say that they’re grandfathered in. They’re not exempt because anyone examined them and decided they deserved to be. They’re exempt because they were there first.

That’s what most of our money rules are. Grandfather rules. They aren’t in force because you’ve tested them and found them sound. They’re in force because they got there before you were paying attention, and nothing has come along since with the authority to evict them.

Some of them are excellent. Spend less than you earn is a grandfather rule makes sense and it is pretty much timeless. The trouble is that a rule which is doing damage feels exactly like a rule that’s doing good. From the inside, both feel like common sense. Both feel like being sensible. Neither one announces itself.

Why the rule never gets tested

There’s a second thing going on in the rat’s situation, and it’s going on in ours too.

The rat’s rule isn’t only wrong. It’s protected. Because the rule tells the rat to avoid the oats, the rat never gathers the one piece of information that would update it. The rule has arranged its own immunity. There’s no evidence against it because the rule has made collecting that evidence impossible.

This is where a little scientific thinking helps. A scientific theory has to be falsifiable. That doesn’t mean it has to be false. It means there must be some possible observation that would show it to be wrong. A theory that can explain every result and survive every possible outcome isn’t really being tested. It’s being protected.

Take my proposition that there are no yetis in suburbia. One verified yeti wandering past a suburban letterbox would prove me wrong, so the proposition is falsifiable. You could search through your entire catalogue of experience, find no suburban yetis, and reasonably decide that my proposition is probably correct. That absence of evidence is useful because, if yetis were roaming the suburbs, we’d expect someone to notice.

But the deeper question isn’t simply whether you’ve found evidence against a belief. It’s whether you’ve left any way for that evidence to reach you.

This is part of what we might call cognitive hygiene: keeping your beliefs exposed to correction. Many years ago I distinctly remember having a conversation with a student of mine where I was telling him about my belief and understanding of a certain principle. He didn’t necessarily disagree with me but he asked me one pointed question, which has stuck with me ever since: “What evidence would make you think differently?”

Good thinking means asking not only, “What supports this?” but also, “What would change my mind?” Then you have to make sure your own behaviour isn’t preventing that test from ever happening.

Money rules do this beautifully.

If your rule is that the share market is a casino, you don’t invest. So you never accumulate a personal history of ten unremarkable years of returns. Your evidence file stays empty, and an empty file can look a lot like agreement. But sometimes the file is empty only because the rule has refused to let any new evidence in.

If your rule is never talk about money with your partner, you don’t raise the insurance renewal in March. You raise it in September, when it’s overdue, there’s a late fee, and both of you are tired. That conversation goes badly. Into the file it goes. Rule confirmed.

The rule has now done two clever things. It has blocked the experiences that might disprove it and helped create the experiences that seem to support it.

And a rule that’s been confirmed a few times stops feeling like a rule at all. It starts to feel like a fact about the world, or worse, a fact about you. I’m just not a numbers person. I’m hopeless with money. I’m not the type who invests.

That’s the shift I want to interrupt, because arguing with a belief inside your own head is a rigged fight. You already know all the evidence you’re going to allow yourself to consider. What follows is a way to stop arguing and start testing.

I’m calling it the examined wallet. It’s four steps and it takes a fortnight.

One rule, in the wild

I’ll run one example the whole way through rather than scatter six of them, because the process matters more than the particular rule.

Take this one, which I suspect is common (as it happens this was a strong rule of my own up until around 8 years ago):

If I pay for something I could have done myself, I’ve wasted money.

You’ll recognise the person carrying it. They mow their own lawn in forty degree heat. They spend a Saturday assembling flat pack furniture badly rather than paying ninety dollars to experienced professionals whose assembly will be flawless. They drive across town to save eleven dollars on a shop, or 5 cents a litre on fuel. They feel obscurely guilty about ordering food, even on a week where they’ve worked eleven hour days.

It’s not a stupid rule. It’s kept plenty of people out of debt. But notice what it doesn’t contain: any mention of what the time was worth, or what week it was, or what condition the person was in.

Step one: write the rule down

The first job is to get it out of your head and onto paper, in a form specific enough to be wrong.

This matters more than it sounds. ‘I’m bad with money’ can’t be tested. It’s not a claim about anything. It’s a mood wearing a claim’s clothing. You can’t gather evidence for or against it, which is exactly why it survives so well.

So write it as a prediction. If I do X, then Y will happen.

If I pay someone to do a job I could have done myself, I’ll feel guilty and I’ll have wasted the money.

Now you’ve got something with clear edges. It says a thing will happen. That means it can be checked.

Two rules of thumb here. Describe the moment, not your personality. Not “I’m a tightwad” but “I stood in the aisle for ten minutes and then bought the cheaper one and thought about it for two days.” And keep it to one sentence. If you need a paragraph, you’ve got several rules tangled together and you’ll need to pull them apart before any of them can be tested.

Step two: check the record

Before you run any experiment, look at the evidence you already have. Four questions.

When has this rule been right? Be fair to it. Most rules that stick around have been right at least once, and often the first time was memorable.

When hasn’t it been right? This is the harder question, because the rule has been filtering your memories for years. Sit with it.

What’s the rule not accounting for? Almost always there’s a variable it ignores. Our example says nothing about time, energy, or what week it is.

And where did it come from? Not to assign blame, just to understand how it came about to begin with. Maybe you grew up in a house where paying someone else to do a job was showing off. Maybe there was a stretch where every dollar genuinely mattered and this rule was the reason you got through it.

That last point deserves emphasis. An origin isn’t a verdict. Finding out where a rule came from doesn’t prove it’s wrong. Plenty of rules were correct when they were established. The question isn’t whether the rule was ever right. It’s whether the conditions that made it right are still the conditions you’re living in.

The rat’s rule was right on the day it was made too.

Often this step alone shrinks the rule to something more accurate. Ours might narrow to: paying for convenience is usually a waste when I’ve got the time and I’m just avoiding the job. That’s a much smaller claim than the original. It might even be true. But it no longer covers every week of your life, which is a meaningful difference.

Step three: run it small

Now you go and find out.

A good money experiment has five features. It’s small enough that a bad result doesn’t hurt. It’s reversible. It’s time limited, with a finish line you set before you start. It’s specific enough that you’ll know whether you actually did it. And you write down what you expect to happen before you begin.

That last one isn’t optional and it’s the one everybody skips. Memory is a shameless editor. If you don’t record the prediction in advance, you’ll adjust it afterwards to match whatever occurred, and you’ll come away having learned nothing while feeling that you have.

For our rule:

For one busy week I’ll pay for one thing I’d normally do myself. Budget seventy dollars. One week only. My prediction: I’ll feel guilty about it, and at the end of the week I’ll wish I’d kept the money.

That’s it. Not a new philosophy of spending. One purchase, one week, one written prediction.

Small is deliberate. If you overhaul your entire relationship with money on Monday, by Friday you’ll have twelve things changing at once and no way of telling which one did what. A large personal reinvention produces a warm feeling and no usable data. A small test produces something you can actually read.

Step four: read the result

At the end of the week, compare two things: what you predicted, and what happened. Write down both.

Get at least one number and one feeling. For our example the number might be the seventy dollars and the three hours it bought back. The feeling might be the guilt you predicted, rated out of five before and after.

Then ask the question everybody forgets: what did you do with the three hours? If you spent them asleep or with your kids, that’s a result. If you spent them scrolling, that’s also a result, and an honest one. The experiment isn’t there to make you feel good. It’s there to tell you something.

Then pick one of three.

Keep it. The rule held. Sometimes you’ll run the test and discover the uncomfortable thing was true all along. The convenience wasn’t worth it, or you genuinely can’t afford this, or the conversation did go badly even when it was planned. That’s not a failed experiment. A rule that survives a fair test has earned the right to keep bossing you around, and you can now follow it without wondering.

Narrow it. The most common outcome. The rule was right about something and wrong about everything else. Paying for convenience is a waste when I’ve got time to spare, and it isn’t a waste in a week where I’m stretched thin. Less tidy than the original. Much more useful.

Retire it. Occasionally a rule turns out to have been made for a life you no longer live, and it can go.

Don’t expect fireworks. The first test of anything is usually a bit awkward and the result is usually modest. You’re not after a transformation. You’re after better information than you had a fortnight ago.

The ice cream rule

Someone taught me something years ago that I’ve never managed to improve on.

Say you’ve got a rule that you’ll never spend more than twenty dollars on ice cream. Fine rule. Sensible. Keeps you honest at the shops.

Then one day you win a jackpot. Thousands of dollars, landing in your account on a Tuesday afternoon for no reason at all.

Is the twenty dollar ice cream rule still the right rule that afternoon?

The lesson wasn’t that rules are for suckers. It’s that a rule is always a rule for a set of circumstances, and it stops being a good rule the moment the circumstances stop matching. The twenty dollar limit was never really about ice cream. It was about a particular relationship between what you had and what you were spending, and when that relationship changes, the number attached to it should probably change too.

Most of us never make that adjustment. We carry the rule forward exactly as written and feel vaguely guilty when we break it, without ever noticing that we’re applying a policy designed for a version of our life that ended some time ago.

Rules don’t have to be wrong to be out of date.

When it isn’t a psychology problem

I want to be careful here, because there’s a version of this argument that is pretty bad.

That version says every money problem is really a mindset problem, and if you’d only examine your beliefs hard enough the numbers would sort themselves out. That’s rubbish, and it’s the sort of rubbish that effectively ends up blaming people for circumstances they didn’t choose.

If your rent is genuinely more than you can pay, no amount of examining your wallet closes that gap. If the hours got cut, that’s not a belief. Some money problems are arithmetic, and reframing them is about as useful as reframing the weather.

So let me be precise about what this method is for. It’s for the rules that are costing you something they don’t need to cost. It’s for the times you’re behaving as though a constraint exists when that constraint may have expired years ago.

Two other boundaries worth stating.

You don’t need to do this to every purchase. Constant self monitoring is exhausting, and it tends to turn into another kind of financial anxiety. Save it for the rules that repeat and that are costing you real money or real peace.

And if money in your life is tangled up with coercion, addiction, or serious distress, a self designed experiment isn’t the right tool and I wouldn’t pretend otherwise. That’s a conversation for an actual professional.

Back to the oats

The rat under the shed isn’t broken and it isn’t foolish. It’s obeying a rule that was accurate on the day it was written, formed fast because forming it fast was the difference between living and not. Every single thing about that rat’s reasoning was sound.

It just never went back to check.

Your money rules deserve the same courtesy you’d extend to any other working theory. They can stay as long as they’re still doing the job. What they don’t get is tenure.

So pick one. Just one, maybe the one you’d feel a bit defensive about if someone questioned it over dinner. Write it down as a prediction, look at what you actually know, run a small test, and read the result honestly.

You might find the rule was right all along, in which case you can stop wondering. You might find it was right about a life you were living in 2014. Either way you’ll know, which is more than the rat will ever manage.

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