Your Money, Your Independence Book Travel Now - Time for Experience Spending
The financial industry, in particular investment management and financial planning, place limited emphasis on helping clients spend money.
There are reasons for this, advisors paid solely by % of Assets Under Management don’t want assets taken out, as it results in them earning less. For financial planners, it’s easier (and safer) with default emphasis on saving more for distant goals, as spending now during windows of opportunity makes analysis harder and recommendation outcomes realized.
To be fair, there are individuals who spend too much and need help saving for their priorities.
That said, my PSA for those adhering to a financial plan: Book your travel now.
If you think inflation in autos, housing and materials are bad, wait a few months to see the surge of pent-up demand flooding the static availability within the travel and hospitality industry.
Evidence is already showing in summer rentals, airfares, hotels, and earnings reports.
For example, Disney’s October-December quarter reported $7.2B in Parks & Experiences division, $1B more than expected and double the prior-year quarter. And don’t think The Mouse fails to understand its pricing power when demand surges.
Yes, the time has come for experience spending with family, friends, and loved ones.
What is Experience Spending?
A concept of having greater value for experiences versus things. Studies find people misjudge what purchases will make them happy, how happy they will feel, and how long that happiness lasts.
Spending money on experiences creates more and longer-lasting happiness than spending on material goods, which people are more prone to comparisons and buyer’s remorse. Also, objects tend to deteriorate with time, while experiences can create lasting memories and become part of your identity.
Timing of experiences is critical.
Consider the family vacation to Disney, it is a different shared experience for all going when kids are 6 & 8 versus late teens.
Or the HS senior and family trip you’ve been meaning to do. What’s their availability (and desire) once in college to go on a family trip with mom and dad? That window’s closing.
Experience Spending isn’t limited to just travel.
Consider having many small pleasures over a few big ones. Saving up for a big purchase is admirable. But in terms of your happiness, is this the best way to allocate finite resources? For many, happiness is more closely aligned to the frequency and variations as opposed to intensity.
Ask yourself if you’d be happier with a few big-ticket items, such as a luxury car, or rather indulge frequently in small purchases, such as cooking clubs, memberships, kid’s activities, and spa days?
In closing, it’s important to treat yourself and those you love along the journey of financial independence, as those opportunities and their impact may not be present later. For many, now is the time to act, expect sticker shock or compromise, and enjoy making new memories.
The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual.
Glenn Brown is a Holliston resident and owner of PlanDynamic, LLC, www.PlanDynamic.com. Glenn is a fee-only Certified Financial Planner™ helping motivated people take control of their planning and investing, so they can balance kids, aging parents and financial independence.