The most recently published blog, which was about navigating financial pressures, included a section about the psychological benefits of savings.
It is fair to say I received a little bit of push-back from one or two readers (you know who you are 😀), who said that there are also psychological benefits to going on holiday (!), suggesting you can only have one or the other.
As you would expect, I argue that there is room for both!
Good financial planning is about doing all the things you enjoy doing, without jeopardising your long-term financial security.
You simply need to be mindful about how spending on holidays fits into your overall finances.
As we're in the midst of holiday season, let's look at the psychological benefits of holidays and how you can ensure you get all the benefits, without hurting your finances.
Psychological Benefits ❤️
First, it's a good idea to remember, why do we go on holiday?
Considering Costs 💰
While the psychological benefits are significant and important, it's essential to consider the costs to avoid financial stress that could negate these benefits.
Here are ways you can ensure the holidays that you love don't hurt your financial position.
1. Budget Planning: Create a holiday budget that fits within your financial means.
The word 'budget' can conjure negative connotations, but when done right, it can actually be a permission to spend without guilt.
Plan for all expenses, including travel, accommodation, food, and activities.
Planning can kill a bit of spontaneity, but it also helps avoid any regrets when you come back and see that you spent more than you expected!
2. Value vs. Cost: Focus on the value of experiences rather than the cost. Sometimes, less expensive holidays can offer more meaningful and memorable experiences.
This doesn't mean you can't take your once-in-a-lifetime trip or a big holiday; if it's somewhere you really want to go and are pretty confident you're going to love it and can pay for it without harming your finances, do it!
3. Avoid Debt: Try to avoid financing holidays with debt. The stress of repaying high-interest credit cards or loans can overshadow the benefits of the holiday.
4. Off-Peak Travel: Traveling during off-peak times can reduce costs significantly. Look for deals and discounts to make holidays more affordable.
'Shoulder season' is your friend! it also usually means fewer other tourists trying to do the same things as you.
5. Local Getaways: Consider local or short-distance getaways that can offer a change of scenery without the high cost of long-distance travel.
This is especially true of places that are cheaper to get to in Europe. Do your research on up and coming places, which will welcome you with your tourism pounds, and maybe avoid the places that no longer want as many tourists!
6. Mindful Spending: Be mindful of spending during the holiday. Set a budget for spending on things you hadn't planned for, a 'free-spend' fund. You won't know what it's for in advance, but allows for spontaneity and buying tat like fridge magnets, like I do!
By balancing the psychological benefits with careful financial planning, you can maximize the positive impact of holidays on your mental well-being without the burden of financial stress.
So, can I go on holiday then?
With my financial planner hat on, my view is: if you can afford to do it, and you think it's going to be worth it, go on that holiday!
Good financial planning is about making sure you have enough money to give yourself permission to spend on things without guilt, and that you have a good balance of living for today vs. saving for tomorrow.
That is it in a nutshell, and those two principles apply perfectly to holidays, especially the ones you'll remember forever.
If you'd like to talk to us about your situation to see if our Financial Planning service could help, you can book in a free initial consultation here:
Otherwise, see you next time.
