What I’m willing to splurge on (or why financial advisors are boring)

Nick Foy, CFP®

In addition to seeming like total fraudsters, lots of financial advisors must come off as boring putzes to most people who come in contact with them, like an effervescent nanny in a pin-striped suit firing off lists of do’s and don’ts to anyone who will listen.

What I try to encourage is a view of spending that lines up with what we know about the psychology of money, and what actually bring the most satisfaction. We’ll call it the High Value Splurge.

I’d like to consider myself a tightwad who understands value. Or, as the famous refrain goes: Price is what you pay. Value is what you get. I’m willing to spend on those things that will actually produce some long-term satisfaction, and unwilling to spend on things that won’t.

To that end, here are some High Value Splurges, those things I’m willing to splurge on to maximize the power of money for my family and me:

  1. Travel. Spending money on experiences and making memories is more valuable than spending money on things that will raise your social status. (With enough Instagram posts, your trip might also raise your social status, but you’ll spend so much time focusing on finding the right filter you might miss the best moments.)

    This doesn’t mean that I’m necessarily willing to overspend on any single vacation; it means that once we set our travel budget, I want to exploit it for all it’s worth. Oftentimes, four trips that cost $2,500 each can bring more joy than a single $10,000 trip. Four different experiences in different places with four entirely new adventures will give us more memories than one week in a single place (typically, anyway).

  2. Things that save me time. As our margin has increased, we’ve decided to spend more on things that save us time instead of those things that will bring only fleeting satisfaction. We happily pay someone to clean our home every other week, and my friend Jimmy has a lawn care service and takes great care of our grass.

    Tasks around the house already take up enough of our limited free time, and some of them are better outsourced to others.

  3. Food. Pop Pop came to town last weekend and we ordered live lobster to celebrate the occasion.  It was so much fun, we decided that every year we’ll start an annual Mother’s Day lobster tradition. It’s a splurge, for sure. But we’ll look forward to it all year long, and marking moments is an important part of our family philosophy.

  4. Giving. Other than taxes, this is our biggest annual expenditure. It has for sure limited our ability to do and buy other things, but we don’t regret a single dime of what we’ve given to others.

Assessing the High Value Splurge means giving an honest assessment of what things will bring lasting satisfaction, and what things will bring regret. Limiting those that are likely to bring regret will only allow additional spending on those that won’t.

Also, take a look at this great post from Morgan Housel: “Realistic Personal Finance Hacks.”

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