What are you willing to spend on vacations? Do you ever have sticker shock, or feel so guilty about the expense that you can’t fully enjoy the time away with family and friends? If so, you’re not alone. Many of us have heard the lectures about saving and investing so much, that spending money on ourselves for pleasure is a bit painful. With that in mind, I want to shift your thinking about vacations as in investment which can have a positive return far more significant than yields on a portfolio. Instead, think in terms of the yield on life.
In our practice, we focus on each client’s unique and personal priorities, not just numbers. When we ask individuals to make trade-offs as a way of discerning what matters to them, they sort through a variety of cards that include financial and non-financial objectives. Couples then share their individual results and together they use the trade-off method to reach a set of five guiding priorities for the choices they will make, which then inform how their plans are developed and their money is managed,
Spending Time with People You Love
By a long shot, the number one priority for the couples who’ve used this process is to spend more time with people they love. Of course, they have other priorities too – things like income security, being prepared for what’s unexpected, and leaving a legacy – but it turns out most people want deeper relationships and meaningful experiences. Yet, vacations are sometimes a point of contention between one spouse and another. The reason is we all have an emotional relationship with money – something like a money personality – which comes from who we are and our upbringings. Combine the desire for spending time with people you love with a fearful money personality, and you get the person who just can’t have fun in fancy hotels. Conversely, a personality that’s carefree and pleasure seeking might be tempted to be a little too extravagant. As advisors, we provide counsel and ideas to help people meet at the right balance point, and then we encourage them to get the most out of the experience.
The Vacation Problem
It was an eye-opener for everyone when we started the prioritization exercise with our long-time clients, let’s refer to them as Katie and Doug. They are pre-retirees with healthy incomes and a hefty portfolio – one would assume all is great! Like so many others, they chose being with people they love as the top priority. So, I asked, “how do you feel you are doing on that today?”, and there was a sigh from Katie while Doug scowled. Obviously, a sore point! I asked them to give individual score of 1-10, with 10 meaning we are 100% in line with this priority. Katie gave it a 4, and Doug scored himself at 7. What could be wrong?
Doug liked to tag family vacations onto his business trips as it often saved them money, such as when he attended conferences at great resorts. Katie was very frustrated that the family was limited to these destinations and from her point of view it signaled that she and the kids weren’t a priority. With their combined careers, income and assets, she couldn’t understand where Doug was coming from.
After deeper conversation, Doug’s childhood in a financially stressed household and the fear he’d felt when he was without a job in the Great Recession had closed off his ability to enjoy vacations. He admitted that he was always anxious about the “extras” that popped up on vacation, ranging from excursions and entertainment to food and shopping. The more was spent, the worse he felt, even if it was well within their budget. In contrast, Katie treasured the time with her teenagers and considered the “extras” as essential aspects of vacation fun. She was sick and tired of Doug casting his gloom over everyone.
Aligning Around Priorities
Just airing our feelings is healthy, but how do we change behaviors and attitudes to reach a better outcome? That was our goal with Katie and Doug. We asked, “what would you each like your score to be on the priority to spend time with people you love?” Interestingly, Katie would be satisfied with an 8 but Doug wanted a 10. He rationally knew this was a problem area, and wanted help handling his emotions about spending money on happy vacations.
Now with a shared goal of reaching 9% “performance” on this priority, we talked about ways to move forward.
• The “conference” vacations were nixed, and the family developed a bucket list of experiences.
• Katie agree to look for inclusive vacations where possible, or pay in advance for tours, entertainment and pricey excursions to reduce the stress Doug felt pulling out his wallet.
• We modified their plan to create a travel account and agreed on an annual contribution. That way, the pain of withdrawals from savings for Doug was eliminated and Katie had some spending guidelines that were very comfortable for all
Financial Life Management
The unfortunate reality is many advisors are only trained to focus on saving and investing. In the conventional approach to finances, more money accumulation is almost always the primary goal. While we all need to act responsibly to protect our families and our futures, money is also meant to help enrich our lives now. I talk to my clients about spending well – using money to optimize and literally create a positive return on life. That means mindless or excessive spending is harmful, but mindful spending can make the difference between a life survived and one lived richly, full of inspiration.
Financial life management, our approach at Prio Wealth, is a disciplined, collaborative process that goes beyond conventional wealth management to integrate life and money and help clients make better choices. It’s very rewarding to help improve lives and know that we make a difference.
I sent a text to Doug the other day – he’s with his family at a lake in upstate New York. I asked, “How’s the vacation going?”
His response was sweet, “It’s a ten!”