In college, my mind was set on becoming an ethnographic researcher. I wanted to study people and cultures that were new to me while traveling as extensively as possible. After I earned my diploma, I pooled every dollar to purchase a one-way ticket to Costa Rica.
Even with my rookie-style budgeting, I was able to make the trip happen â€“ and it didn't matter that my typical Costa Rican lunch had to be hand-picked avocados and stale bread. It was a life experience I wouldn't trade for the world.
Saving money for practical matters always presides; but once you've eliminated debt from your life, you start to have choices. In my estimation, if you're debt-free, budgeting for life experiences is totally worth it. How do you budget for them, and where do you draw the line?
Extraordinary experiences and modern marvels
What if you had the opportunity to witness the Aurora Borealis, a space launch, or maybe an African safari? Experiences like these may come once in a lifetime. But you still need to save up for them. Stashing your money in a short- (or long-) term certificate of deposit is a great way to ensure you won't touch your travel fund until the account has matured and you're ready to start booking.
Unexpected major moves
Maybe a job is pulling you to a new city. Maybe a family matter is calling you back to your hometown or you're simply trying to feed an insatiable need for wanderlust. Whatever the reason, major moves can happen in the blink of an eye and, when they do, costs add up fast. Having money saved for a moving truck and down payment (or rent deposit) will allow you to respond to an opportunity even if it comes up suddenly â€“ but a shrinking, or bare-bones bank account balance might cause undue pressure or completely hold you back.
Even if your children swear up and down they will never get married or have children of their own, it's OK to hold out some hope. (Just don't tell them!) Having a little pot of money for your future love(s) of your life is a perfect way to prove that grandma and grandpa know best.
If you're already a grandparent, you know how much it means to have funds set aside for gifts, trips, or special events. Setting up a Unified Gift to Minors Act (UGMA) or Uniform Transfers to Minors Act (UTMA) account is an easy way to gift funds to your favorite minor.
I recently signed up for a credit card that allows me to roll reward points over to my 401K. I was busy patting myself on the back for my educated financial management, until I realized I needed to reel back my optimism. I did some deep-diving into my current contributions and what the magic of compound interest could do for me and I realized that, over the course of 38 years (with the current contributions I'm able to make), my retirement money would surely run out before I did, especially if I continue to feed my travel bug. This is where I feel a tug and need to find balance. In order to continue feeding the thrill and profound callings in your life, you'll need to plan practically too.
College (for you or your children)
If you think that you or your children may someday go to college, 529 college savings account rates are great right now. So adding this type of savings account to your portfolio, sooner rather than later, will pay off in the long run. Student loan debt is an increasingly major pain point, but what if you can give your children the ability to graduate without a massive loan burden? It could be a life-changing event, (though never do that at the expense of your own retirement.)
Paying down debt is tedious. But it's still important to continue to budget and save your money after you're free from it. Now that you're setting some cash aside for experiences in life that aren't as demanding as your emergency fund or debt repayment, how do you do it? Do you try to take a bit out of each paycheck? If you're planning for a vacation, do you book the pieces over a long period of time to help break out the costs or would you rather have every penny saved before booking? What's different about how you save after paying off debt and for what are you saving?