Today this article came up in my Facebook feed. It echoed a sentiment I’ve seen in many different places. Stop buying stuff, start buying experiences. This is good in that it helps people reduce their waste but bad in that it simply replaces one outlet for excess spending with another. Spending is a big issue with Americans awash in debt and often headed towards bankruptcy. Spending gobs of money on yourself is also inherently selfish whether it’s on stuff or experiences. The best advice is really to just stop wasting your money.
Articles like this remind me of the movie This is Forty in which a previously well-off American family copes with a potential bankruptcy. This bankruptcy would cost them their huge house, their fancy cars, their businesses, maybe even their marriage. It is a serious deal. How do they cope with it? By taking a fancy weekend vacation to reconnect as a couple. I watched this scene with my mouth agape struggling to understand their decision. The movie is probably reflecting the actions many Americans take, but still I feel convinced that extravagant vacations are not the real solutions to life’s problems. Sure, it’s important to spend quality time with your spouse, but quality time does not have to be super expensive, particularly if you’re facing bankruptcy.
Anyways, back to the article. The family in it purports to be leading a simple life, but then implies that they use all the money they save from doing this on luxury vacations. They note “we’d rather spend our cash making memories” but only look at the positive memories their spending creates. This ignores the fact that money is the leading cause of stress in relationships. Maybe they’re rich and money isn’t an issue for them, but their note that “gas isn’t cheap” seems to imply that they aren’t that rich and the basic demographics of America ensures that many of their readers aren’t. Taking expensive vacations now may be sowing the seeds of future financial marriage stress. It is wrong to saddle people struggling to make ends meet with the idea that you must take extravagant vacations to be a good parent.
Vacations are Expensive
The median wealth of Americans under age 35 is less than $7,000! Six days for a family in a cabin with a hot tub in the North Carolina Mountains could easily cost $1,000, probably more when you add in travel costs. Sure it’s no $12,000 per ticket Fyre Festival, but if you only have $7,000 this will seriously impact your future wealth. Of course, as humans we love to look at things in the short term. If we have $1,000 in checking, we’re likely to spend it.
A big part of why people rationalize spending $1,000 on a vacation each year is because they don’t have enough faith in compound interest. They view $1,000 today about the same as $1,000 next year. This couldn’t be further from the truth. If you invest your money in simple, broad, low cost index funds (like VTI) it will likely double every 7 to 10 years. Doubling $1,000 might not seem like all that much, but think about adding another $1,000 to it every single year. If you can get 10% returns (on the high side but not unheard of) then after 10 years you’ll have over $16,000. Add in another $1,000 of normal savings each year and the total jumps to $32,000. This is around the $35,000 median wealth of Americans aged 35 to 44, so if you start this in your early 20’s you’re sure to be ahead of the curve. Keep it up for another 10 years and you’ll have $120,000, well above the median wealth of $84,000 for 45 to 54 year olds. A thousand dollars per year may not seem like much, but with the magic of compound interest slow and steady saving will win the race.
With Great Wealth Comes Great Responsibility
What if you’re one of the lucky few who actually has enough money? The top 90th percentile of earners generally have over $42,000 in disposable income each year. Taking $1,000 from this for a vacation might not seem like a huge deal, but it is significant. Even if you make $100,000 per year and manage to save $12,000 annually (far above average) adding $1,000 to it will cut nearly 3 years off the time it takes you to reach financial independence (thanks When Can I Retire). Once you reach this promised land, where your savings earn more income than your expenses cost, you have truly found freedom. Sure, you can keep working for fun, safe in the confidence that you have F-you money, but that still doesn’t mean it is time to start splurging.
Think of all the people in the world who have it worse than you, who desperately need a helping hand. If you gave the money you save from not taking fancy vacations for four consecutive years to the Against Malaria Foundation you could literally save a life! If you’d rather reduce the population, then you could give that money to The National Campaign to Prevent Teen and Unwanted Pregnancy. Heck, you could do so many good things for others with this money I could never list them all here. Even if you can’t figure out something to donate to now, the truth is that there will still be needs in the future. The key thing to internalize is that every time you waste a dollar on luxuries for yourself you’re taking it away from a very needy world. Practically everyone paid a decent wage is guilty of this, but living your best life means working to reduce your own waste as much as possible so others can be helped.
Fancy Vacations are Impossible for Many
Now of course, most Americans don’t have the luxury of this choice. They don’t have $1,000 of vacation money just hanging around every year. The bottom third of the country doesn’t even have $1,000 in discretionary income each year. There is literally no way for them to afford this extravagance and they should not be made to feel like they are bad parents because of that. People in the 50th percentile of income have about $10,000 of discretionary income per year. It is financially possible for them to take such vacations, but this will likely put them into the 33% of lower to middle income people who feel they will never be able to retire. Again, it feels wrong to opine to these people that spending this money will make them better parents.
The reality is that you can be a great parent without spending a ton of money on your kids. They have some good suggestions in this article, stuff like weekly trips to the zoo, but without some planning even stuff like that can end up being a huge cost.
How to Go Someplace Fun for Cheap
- Find someplace fun
- Bike there instead of driving
- Bring your own food and drink
- Really immerse yourself there
Of course someplace fun doesn’t have to be someplace that costs money. There are plenty of parks in the U.S. that can be quite fun that cost nothing. My young son can stare in wonder at leaves and grass in our local park for hours. Add a basketball or some other sporting equipment and older kids can get exercise and entertainment there too. How about your local library; have you given that a try lately?
Most Americans have so many free fun things surrounding them that they just end up forgetting about them. Don’t fall into this trap. Keep your eyes open to the amazing free opportunities around you instead of the expensive ones that are far away. Staying local also helps you save even more. In the article, they mention that they have an annual pass for the zoo, and considering the amount of times they go it’s probably a pretty good deal. However, there’s no discussion of biking there, and I assume that, like most Americans, they drive.
Driving isn’t free. Of course there’s the cost of gas, but every mile you put on your car also brings it closer to breaking and drops its total value. Unless you have a really efficient car you’re looking at a total cost of over 50 cents per mile. If it’s 10 miles to the zoo that’s $10 just for transit. Do it every week and that’s over $500 per year! Maybe 10 miles sounds like too far to bike with a trailer, but tell that to this guy. Okay, if you read that link you’ll realize that that guy is a completely amazing human who few of us can measure up to. Still, if he can bike 10 miles while on the verge of death, weighing over 440 pounds, you can probably bike 10 miles with a couple kids in a bike trailer. If you really can’t handle such rides you could also consider an electric bike. It’ll cost as much as a year’s fancy vacation but likely last for decades and end up saving you many times its price. I’ve found that the trips that require the most effort also create the best memories. Some people try to accomplish this by flying ever longer distances for vacation. But you can do the same by just biking hard to something that’s right past the edge of your comfort zone.
If you are going to drive, at least try to drive someplace fairly local. The family who wrote this article seems to do this with their Revolutionary War site visits. This is a good idea. Right now there’s an issue with overcrowding at the national parks. They’re amazing places, but many people travel hundreds or thousands of miles to visit them while ignoring closer parks. If you stay local and go to a less trafficked state park or historic site you’ll save money and skip the crowds. I’ve been to many state parks near places I’ve lived New York, Virginia and Arizona, and never had an issue with crowding (except the isolated case of Taughannock Falls on a hot summer day when everyone wants to be in the water). Instead of planning an expensive trip to a far off national park plan a cheap trip to a nearby state park instead.
Meet Your Neighbors
And what if there is literally nothing fun close to your home? Well, first, I’d challenge this. Have you really taken a hard look at a map? Have you put in effort to actually get to know your neighbors? Visiting with some nice people from the neighborhood can be more fun than any zoo. The past few weekends my family has cooked a few dinners with a family we met down the street, and it’s been awesome. People blame things like Facebook for breaking down our social fabric, but I think the fact that we concentrate on far away experiences and ignore the people living right next door is even more to blame. Meeting new people is hard, especially for introverts. If you have this trouble, then limiting the distance you’re willing to travel for experiences is a good way to help force yourself to actually go out and meet your neighbors. If you live in a place where there are no interesting places nearby and you hate all your neighbors then I truly sympathize with you. If you’re stuck in such a hell, wouldn’t it be better to save the money to fund moving someplace better than blowing it on one week of happiness each year?
Travel for Work, Family and Really Good Friends
Having read this far you might think that I am completely against all travel. That isn’t the case. If your work needs you to travel then by all means get paid to go see the world. I had to spend a month or so working in Europe for an old job and it was hard, but great. Because I was working there I could get guidance from my local co-workers on where to go. I didn’t have as much time to see the ‘sites’ but I got a view into what it would be like to truly live there and I got paid while doing it. If your current job doesn’t afford the travel opportunities you want, then consider changing it. Perfect your schmoozing, learn a new language and go into sales for an international company. Salespeople travel for work a lot! It doesn’t just have to be sales though. Find a non-profit that needs to send people to developing nations you’re interested in. Find a consulting company that sends people onsite to other states or countries. There are lots of options to get paid to travel if that’s what you really want.
Of course, there are also times you should pay for your own travel. Family members used to all live within a few miles of each other. But, as travel become easier and jobs more specialized, many families spread out across the country. My own family is spread up and down the Eastern Seaboard while I’m currently out in Arizona. You probably live hundreds of miles from certain family members, possibly thousands. Maybe I’m old fashioned, but I think staying close with family is one of the keys to a happy life. For that I’m willing to pay for travel. On the plus side, when visiting family you often get room and board for free so it isn’t that expensive.
Finally, the same thing is true for really good friends. I talk about making great friends with your neighbors, but what happens when a job change pulls them hundreds of miles away? You could just keep in touch over Facebook and mostly write the relationship off. But, if you’re really good friends then you might consider visiting them, or doing a joint family vacation somewhere in the middle. For really old friends weddings can be a great way to keep in touch. Every wedding I go to is like a mini-reunion of old friends and family which makes it more than worth the cost of travel.
I think having a strong family and friend group is a key to happiness and not a superfluous luxury. Repeated in person interactions are the basis for trust in society and I am willing to spend for them. I also understand that not everyone has this same luxury. When planning a reunion or trip I try and make sure it’s as affordable as possible, but even then I’ll never get mad at someone who can’t make it because of money.
I’m sure Elizabeth and Bear and Blaise are a nice family, and they didn’t mean any harm in writing their post. They do some smart things like buying their kids $50 on sale kayaks that they can probably resell for almost as much after the kids are done with them. And who knows, maybe they do bike to most things and just didn’t mention it? Maybe they don’t judge other people for not taking similarly expensive trips? Maybe their trips cost far less than the $1,000 I estimated? My main point is that these details matter. Simply replacing expensive “stuff” with expensive “experiences” is not going to help you financially. Putting a bit of effort into free or cheap experiences can make them even more memorable than expensive ones. Stop wasting your money. Get out and about in your local community. Forge friendships with your neighbors. Build a solid financial base so money worries don’t hurt your relationships. Tame your desire for more stuff. Give away your excess wealth to make the world a better place. You’ll probably end up happier doing all these things than you will spending a week in a luxury cabin each year.