I recently had the opportunity to travel overseas for the wedding of a good friend of mine, as well as some general vacationing – or “holiday” if you are from Europe. It had been several years since my last trip across the pond, and, at the time, I traveled alone.
For this trip, I headed to Europe with my wife. In order to make the trip as enjoyable as possible, while eliminating the stress that comes with spending money, I knew I needed a budget. In fact, I knew I needed to save the money for this major purchase long before we embarked.
I am in the same boat with many Millennials when I say I do not yet have a financial advisor, nor do I have a documented financial plan. However, I knew I needed to save a good amount before we left in order to feel safe and free of stress. In January, we started putting money away into a separate bank account each month in order to pay for the trip. Here are the overall benefits that I experienced by saving early and often for this my major purchase goal.
Maybe we should save more
Putting away small amounts of money each month did not have a big impact on my overall lifestyle; it made me realize that I might in fact be able to save more each month for both long-term goals, such as retirement, as well as shorter term ones, like traveling. This would be beneficial for both advisor and client, especially Millennials with the upcoming and ongoing wealth transfer.
Celebrate the wins
Establishing what we needed overall for the trip, then dividing that into daily food, hotel, and spending allotments, helped both me and my wife have the fun we wanted on a daily basis and reward ourselves for being so diligent in saving.
Peace of mind
No one likes constantly putting charges on their credit card, especially when the bill can get out of hand quickly. Monthly credit card interest rates can be a very slippery slope that one should avoid whenever possible. By saving before the trip, it was effortless to return home, look at the bill, and pay it in full due to the fact we had the money set aside in the separate travel bank account to do so.
Build wealth
Paying ahead, instead of paying in the rears, allows individuals and family to build more wealth. This can have a snowball effect for both client and advisor. They say habits form once you do something for 21 straight days. Saving for a major purchase has helped us create habits that build wealth.
Overall, I cannot stress how important it is to save early and often for things that come up in life. Recently, Navy Federal conducted research showing that Millennials age 18-34 are thinking less and less about their finances. There is a major gap here that advisors can fill in the coming years, a gap that allows Millennials to plan better for their major purchases and vacations, and at the same time allow advisors to capture more clients and have meaningful relationships.
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