How do you budget for experiences after debt?

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 — 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 — but a shrinking, or bare-bones bank account balance might cause undue pressure or completely hold you back.

Grandchildren

Infant at airport check-in

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.

Retirement

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?

More about...Budgeting, Debt, Planning

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Tina in NJ
Tina in NJ
5 years ago

When we were saving for our house down payment, we did a reverse ladder of CDs. Each new CD had a shorter duration, corresponding to our projected buying date (roughly). It worked really well.

Beth
Beth
5 years ago

I think the structure of this post shows the problem at hand: there’s a lack of focus. You can’t have everything all at once. You have to set priorities. Here’s what I do: – Retirement savings are non-negotiable. Every month, plus a top up at the end of the year. – I’ve built my emergency fund and met my home downpayment goal, so I’m allocating those monthly contributions to other goals. – Car fund. Yes, I plan to pay cash. – Allowance/ways and means fund/opportunities fund. Different PF bloggers have a different name for it, but it’s essentially a fund… Read more »

Kristi @ Femme Frugality
Kristi @ Femme Frugality
5 years ago

When I was younger and traveling through Europe my lunches were very similar, stale bread and a banana or apple from food carts in the park. We have to apply that same thinking about frugal living as we do to all areas in our life, just on a broader scale. I agree with the you that all of these are important financial considerations.

Unfortunately, I’m not yet out of debt, so I can’t speak to how my savings are different. Soon though!

amanda
amanda
5 years ago

I’m going to borrow from Beth to explain what I do. Luckily I’ve no debt except my mortgage. So with each paycheck I set aside a set amount for:
Emergency fund, car fund, travel account, monthly bills, IRA, and college accounts for my nieces. My travel account is not directed at a single location, I have family in scattered places, but when the account has larger balance, I take off to an international locale.

KT
KT
5 years ago

I (finally!) paid off all my debt at the end of last year. It wasn’t alot, but it just kept revolving around the same amount. However, being that I was so tied down for so long, I decided to hit the brakes on some things once that final payment was made. I went a little gung ho and redecorated my apartment, bought new workout equipment for my apartment (dumbbells and barbells), took a trip to FL to see my dad (who I hadn’t seen in 3 years!) and then decided to save for a cruise next year (which I just… Read more »

Sanjeev
Sanjeev
5 years ago

Great Article Megan ! I have been Debt Free for past 4 years. Got rid of credit cards debts, debt from family and friends, student loan, and car loan. It feels Great and Amazing. I strongly suggest others to be Debt Free. I am saving for house. My plan is to have 25 – 30% down payment. I have a separate saving account called “House Account”. Every paycheck money automatically goes in. I like to Travel, 2 – 3 trips a year. I make sure one is 1 or 2 is a Road Trip and 1 by plane. I have… Read more »

lmoot
lmoot
5 years ago

I’ve never been any good at having general savings. It’s a good idea to have a general travel fund if you know you enjoy traveling, but somehow I can’t get the motivation. If the travel will cost 2k or less, I just make a budget and charge it. Then I immediately stop all savings so that I will have enough left in checking to pay off the cc by the next cycle (which, depending when I charge, could be as long as around 60 days). I don’t like creating a separate fund unless it’s for something I couldn’t handle saving… Read more »

Chris
Chris
5 years ago

There are so many ways to use your wealth after you clear debt out of the equation … thanks for the inspiration!

Jennifer
Jennifer
5 years ago

Could you state which credit card allows the reward points to roll over to your 401K? I have not seen that before and like the option. Thanks.

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