Spending Money on Traveling…

Traveling Guy and I had an interesting conversation the other day in which I asked one of my favorite financial questions: What does money represent to you? Money, after all, is not an actual thing in itself. It is a piece of paper that we, as humans, have decided to use as our medium of exchange. We cringe at discussing it (oh, how we cringe!), but on the face of it it’s not even all that compelling a thing.

What it represents, though, now that gets more interesting. I’ve been in the financial industry for 25 years, working with individuals and families in all sorts of situations and have seen just about every dynamic around money that you might imagine.

Everyone is different here, but most answers to the representational question come down to some combination of a few things: freedom, security, safety, power, or even, in some cases, evil.

Much of the answer that we give depends on the messages we received in our families of origin. What were the messages you received about money from your parents? Was it considered a good thing? A bad thing? Something to be chased? Desired? Feared? Loathed?

Take a minute to think about that and then see if you can pinpoint what it represents to you now, as an adult. I’m a combination freedom and security gal, myself, leaning more towards freedom. Let’s call me 70/30 freedom. Traveling Guy, on the other hand, might say freedom and some combo of security and safety, but he’s 30/70 the other way.

And why does this matter?

I’d argue it affects every aspect of how you earn, attract (or repel), save, invest, and spend money, but as this is a travel blog and not (usually) a financial advice blog, I decided to write about this because I believe it massively affects how you plan for and spend money on travel. And as the market has wobbled here a bit as of late, everyone is suddenly feeling a bit more pinched, financially, than they might have felt a few months ago.

And that tends to affect how much we feel like we can spend on things like a great trip.

If you are, like me, a mostly “freedom” money person, you’ll tend to not have a problem spending money on travel, regardless of whether the market is good or bad or you’ve even looked at your 401(k) in the last 6 months. You’re also not very good at budgeting, nor do you likely go out of your way to save money. You love great hotels and business class flights. You just go for it.

I see you, my people. 😉

If you are, however, like Traveling Guy, more of a “security/safety”person, you will not only be more budget conscious on a regular basis (a good influence on me, I will wholeheartedly admit), you might really put the worrying in gear if your savings have taken a hit recently. You might even rethink or postpone a trip. (Please note that Traveling Guy would never do that, but I sure know people that would. And have.)

(“Power” people tend to spend money to keep up appearances no matter what sort of stress it creates for themselves or for anyone else. They are, in my experience anyway, a smaller percentage of people, and often unpleasant and hard to deal with, so I’m going to cheerfully leave them out of this discussion.)

And so here’s where Brene Brown comes in… all the money personality types simply need to take each other’s word for it as to how they are feeling. I’m not really going to understand you and you’re not really going to understand me. We all have a different perspective and a different history around money. No one is crazy. Or irresponsible. Or cheap. And gratefully, there are solutions to bridging the gap.

My favorite is the “Travel Account”.

As is likely obvious, I think travel is essential. It plays an extremely important role in my life, my happiness, and my overall wellbeing, so I am happy to invest in it. I transfer a set amount of money every month into my “travel account” just as I do my retirement accounts. I don’t invest this money, I don’t want it fluctuating – I just put it in very short term bond fund or money market and leave it alone. It doesn’t matter so much that it grows as just that it is THERE. Almost like a sinking fund, if you will.

Then, when a potential trip arises, I don’t even have to ask “can I afford this?” – if the money is in the Travel Account, then I can. I don’t have to care what the market did last week or if my income has gone down, because my travel account is already funded.

This has been the number one most useful mental accounting trick that I’ve suggested to clients over the years, particularly as someone is retiring and the stress of living on a fixed income is beginning to rise. If travel is a priority, treat it like one. Set aside some funds in a Travel Account.

This is important regardless of asset level, by the way. I’ve seen extremely wealthy people cancel trips when they suddenly, for whatever reason, feel like they shouldn’t spend the money on it. This is a psychological tool, not a financial one.

Hopefully we all get to travel more in 2022. While you’re planning, ask yourself what money represents to you, and, if you have a travel partner, what it represents to them. Understanding and honoring the answers will go a long way towards building a trip that makes everyone happy. And if you’ve both set aside funds in a Travel Account, all that’s left to patiently discuss is whether you pony up for that really fabulous hotel or not.

Cheers!

Traveling Girl