While I agree that not overspending is the right strategic goal, and this "five times" rule would get you there, it's just so random. A "hundred times" rule would also get you that benefit, just more so. Thing is, neither is realistic. Take your car example. A new car these days averages north of $40k. Would you really not buy it because you can't afford to spend $200k on a car?! And lest you respond that if you can afford $40k and not $200k you should buy a car for $8k, let me assure you that "common wisdom" to the contrary, the data prove that buying a car new is less expensive overall than buying it when it's 1, 2, 3, 4, or 5 years old, if you drive it in all cases until it's 10 years old.