The annual holiday is a well-established fixture in the calendars of most families and provides great motivation to get through the grind that is the life in between. A holiday is well-earned, but is it money well spent? Chris Masters, WoWWizard! of Financial Health positions that the expense of a well-earned break can very much be an investment in our long-term financial health.
The Annual Holiday – Good for Your Wellbeing – Good for Your Wallet?
Holiday season is firmly upon us and this is the time of year when we allow ourselves to let our hair down, to re-engage in play and to recharge the batteries. A huge dose of fun and engagement in our own versions of ‘wellbeing’ often returning with a renewed vigour for who we want to be and what we want to do next.
A long-held belief at WoWW! is that our financial health is heavily influenced by our approach to personal wellbeing and without good personal wellbeing we will never be far away from troubles with money. The annual holiday and its associated planning offer the perfect example of how this relationship can work in ‘real life’. Once we realise this, we will see the lens of wellbeing as a key tool in creating the best version of ourselves, both financially and on a personal level.
Let’s start with the financial planning …
Asides from all the fun things in financial planning, such as pensions, investments, life insurance and wills … you know, the fun stuff, we can only engage in building a sustainable approach to finances if we can tick the box called ‘budgeting’. The part where you look after pennies … where we spend less than we earn and build up a surplus so that your future self has some more attractive choices.
The disciplines required for delayed gratification are much easier to deploy if we can attach a visceral emotion to a future reward. When it comes to holidays, we tend to have a plethora of past experiences that we can call upon to help us with the discipline to allocate budget, ideally in advance or at least to settle the credit card bill before Xmas. The short-term pain of budgeting is an acceptable one when the reward is so much fun.
Planning a holiday is a fun exercise in the benefits of delayed gratification
So, when we spend time thinking about the annual holiday and discussing it with our loved ones, we are teaching ourselves one of the most basic skills required for financial health, the ability to delay immediate gratification for a future reward. We are also able to see a future version of ourselves spending time with the people we love, being present in the moments and having a good time. The planning process itself allows us to immediately feel optimistic and connected – two states of positive emotion that have proven wellbeing benefits.
When we think about holidays, we tend to think of the fun we will have engaging with loved ones, the slower pace of the day where we can really enjoy the moments, and in many ways the re-connecting with ourselves. Without the need to visit a health farm, a holiday will by default tick a lot of boxes that would satisfy a well-balanced wellbeing routine. If we take our favourite 5-ways to wellbeing as the model, we can easily see how this works …
1. Connect (or re-connect) – with ourselves and our loved ones
2. Be Active – engaging in play and moving our bodies for fun
3. Take Notice – to just be in the moment and rediscover what makes us happy
4. Keep Learning – trying new things, experiencing new cultures, getting lost in a good book etc.
5. Give – a reward for our families and a much needed rest for ourselves
Holidays are a great way to practice wellbeing and remind ourselves of the regenerative power that self-care has. We do well to remember this when the daily grind wears us down.
The magic of Disneyland
I first made the connection of the financial health benefits of wellbeing by observing a family I know well, and their mission to get to Disneyland. Mum was motivated to give the family a once in a lifetime trip to build special memories, but didn't necessarily have the budget. There was a really powerful motivation, but we all know the magic of Disney isn’t free. A problem requiring a solution and a personal wellbeing regime was the answer.
At the time mum was a smoker and had tried unsuccessfully to quit on numerous occasions. If she could quit, she would free up budget for a savings plan and the trip of a lifetime could begin. After 2 years of wellbeing practice, Disney arrived and didn’t disappoint, and the numerous wellbeing benefits would be long lasting.
The best things in life are free?
But holidays are not free, in fact they cost a lot of money and often money that we don’t have. A pre-pandemic (2019) article in the Sun Newspaper suggested that the average amount spent on holidays in the UK topped £5,000 per family. So how can the annual holiday be good for our wallets?
To have more money in our wallets we essentially have a few choices at our disposal, we can either ‘earn’ more, ‘save’ more or ‘spend’ less. All of these choices require decisions to be made in the present that can hurt and, on some levels, we are choosing a painful option against an immediate pleasure. To take a more painful option, we need motivation that something better awaits that will make it all worthwhile and the holiday vision is one that we can easily grasp.
As well as the motivation, we also need help, especially when we are tired at the end of a long day/week. A balanced wellbeing routine helps us to resist the urges that marketing departments put in front of us on a minute-by-minute basis. The best versions of us as ‘Well-Beings’ can better resist the urges of fast food, alcohol, take aways, over-spending etc. and when we are well, we tend to sleep better which makes us better at solving all kinds of problems. Holidays are a reminder of just how effective wellbeing/self-care is for us. By using that as motivation, we are able to practice budgeting and restraint - skills we can all benefit from.
Long term financial health
Retirement planning is something we all have to do but staying motivated for an event that is many years into the future can be hard. In a 2022 article by money farm (link below) it was suggested that a suitable savings rate for a comfortable retirement was on average £7,300 p.a. and when we cross reference this against the research suggesting the average family is spending £5,000 p.a. on holidays it makes you pause for thought. It is said that retirement is the longest holiday of your life, maybe we need to show affection for retirement planning in the same way as we do for the annual holiday.
Budgeting is the cornerstone of long-term financial health – it provides us with choices for our future selves and when engaged in positively can allow us to feel more optimistic and connected. When we master the basics and can see the benefits of the choices it provides, we can then consider building a wider set of future priorities that extend beyond the annual holiday.
Your long-term financial health requires you to master the basics, to set priorities and to picture a future version of yourself with choices. The choice to stop work because your mortgage is paid off, the choice to repair the roof because you had an emergency fund, the choice to support your children through their education and onto the property ladder and finally the choice to keep going on that annual holiday for the rest of your days.
Happy holidays!
Chris
References
This is the huge amount the average family spends on holidays each year | The Sun
Average Savings by Age in the UK: How Much Should You Be Saving? (moneyfarm.com)
