The Ten Times Test: An Exciting New Rule of Thumb for Becoming Wealthy

A New Way of Looking At What You Spend vs. What You Have Saved

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Rules of Thumb

When it comes to personal finance, people love rules of thumb.  Famous examples include:

  • Total student loan borrowings shouldn't exceed your expected first year salary. 
  • Your net worth should equal your age times your salary divided by ten. 
  • Follow the 20/4/10 rule when buying a car. 
  • You shouldn't spend more than 2.5 times your household income on a house. 
  • Your budget should be 50% fixed expenses, 30% discretionary, 20% savings & debt repayment. 
  • The percentage allocation to bonds in your portfolio should equal your age.
  • Your emergency fund should cover X months of expenses, where X is the national unemployment percentage rate. 

Well, there is a new rule of thumb in town and it’s called The Ten Times Test.


The Ten Times Test

The Ten Times Test was first mentioned in Pirates of Financial Freedom and has been well received.  What does the Ten Times Test say?  When buying something you want (rather than something you need), you should have at least ten times that amount in savings.  For example, if you want to spend $50 for dinner at a fancy restaurant, you should have at least $500 in savings.  If this isn’t the case, that means you are spending over 10% of your life savings on something you don’t even need.  This test works whether you are just starting out wanting to buy a candy bar, all the way up to when you are a millionaire wanting to buy that Ferrari.



So I Can’t Ever Buy It?

If it doesn’t pass the test, does that mean you can never buy it?  Of course not!  In fact, a big reason to get your finances in order is so you can later blow money on fun things you don’t need.   What the test says is that you should delay your purchase.  Think delay.  You’re not telling yourself “no,” you’re telling yourself “not yet.” 


But I Want It Now

You can probably think of many reasons why delaying your purchase is the right thing to do in theory.  But you don’t care do you?  You just want that thing, as soon as possible.  This test only helps you if you use it, so how can you pass the test faster?


Get Some Quick Cash

In order to pass the Ten Times Test, you need more savings.  And that means you need cash.  So let’s explore some ways to get it fast.

  • Increase your income:  Pick up extra hours at work.  Do freelance work.  Teach others something for a fee, clean houses, be a personal assistant for a wealthy person, cook lunches for others so they save money by not going out to eat.  There are thousands of ideas online for how to make extra money - go find one that you like. 
  • Sell stuff:  Do you really need all that stuff in your closet and basement?  (Hint: the answer is no.)  Sell it and get the cash.  Plus, having less clutter will make you more relaxed.
  • Slash expenses to the bone temporarily:  As Wes Moss says, it is time for an “economic shutdown.”  Slash everything and cancel as many non-essential bills (especially recurring ones) as possible for a month.  Rather than spending 90% of your income and saving 10% like others recommend, try only spending 50% of your income like J. Money suggests
  • Focus on the big three:  As the wise J.D. Roth pointed out in his Get Rich Slowly course, you want to focus on cutting the big expenses: housing, transportation, and food.  It is still a good idea to rent a free movie from the library to save $5, but that isn’t going to get you fast results.  Instead, how about you move in with your friend/parents for the month and rent out your place, putting that saved rent money toward your emergency fund or retirement?  Bike or take public transportation every other week, leaving your car in the garage.  Try following Mr. Money Mustache’s example of eating healthy food for as little as $1 per meal


The Past Is the Past

So you haven’t been following the Ten Times Test before now?  And maybe you haven’t been the most financially responsible in general?  Now is the perfect time to change that.

  Take control of your financial destiny today!


Share the Wealth

Do you know someone who can benefit from this advice?  Share it with them!  After all, friends don’t let friends be broke. 


About the Author

Joey Fehrman is the creator of the Ten Times Test and author of Pirates of Financial Freedom (the first personal finance adventure novel).  He is a University of Pennsylvania graduate, CFA charterholder, and native of Omaha.  While working on Wall Street he constructed investment portfolios and researched investing ideas for high net worth individuals and institutions.   You can learn more about him and the book at