Paid Time Off (PTO) is actually a great term for the value you and your family can get from two weeks in the Sun now and again
When we consider financial planning, our focus often centres on the long-term, capital-building, intensive side: building retirement savings, protecting wealth, and investing wisely.
While these are essential components of any decent financial strategy, it’s equally important to recognise the value of spending on what on the surface might seem a little frivolous and short-term. Is there a contradiction here? Spending with a purpose doesn’t always have to mean spending for CAGR, but is equally valuable if it meaningfully contributes to overall well-being.
Recent behavioural research, including insights from Happy Money: The Science of Happier Spending by Elizabeth Dunn and Michael Norton, backs this up. How your money gets used often has a greater impact on happiness than how much money is earned. Now, this isn’t a reason to go out and splurge money on silly things, but is instead an invitation to think about what things are worth having in one’s life… and often, such reflection shows that we don’t need things so much as experiences that satisfy us long after that mint condition 1959 Les Paul or new Jimmy Choos get a place in your living room.
Both psychology and The University of Life will tell you that one of the most effective ways to derive lasting satisfaction from money is by spending it on experiences with others. Which is why splashing some cash on a holiday, which by definition gives you no financial ‘return’, is something we absolutely advocate here.
There’s more than one sort of “dividend” out there
While the appeal of material goods tends to diminish over time, experiential spending such as holidays generates what scientists refer to as “memory dividends”. These experiences become part of the story of your life, living in your permanent memory bank and retrieval and sharable through stories, photos, and conversation.
Something that creates lasting positive emotional value like this are worth their weight in figurative gold. In my own and Thera Wealth’s personal ‘Bible’, Bill Perkins’s exceptional Die With Zero, we are encouraged to align all our important financial decisions with the appropriate life stage and our relative capacity for enjoyment. That makes sense, of course: adventurous or physically demanding holidays are best enjoyed earlier in life, culinary tours of Tuscany probably not that grabby when you’re 22.
The book stresses that while saving for the future is vital, allocating resources for meaningful travel experiences throughout life can enhance both well-being and life satisfaction. If you push all this stuff to “after I’ve released the product” or “when we IPO” or “paid off Uni”, you will almost certainly miss out on deeply fulfilling experiences that build those memory dividends and can even renew/reinvigorate you to work harder when you come back.
The mental and emotional benefits of taking time off
Chances are you like working hard anyway. But in high-pressure professions, chronic stress and burnout are real challenges. Time away from work is not simply a luxury, but arguably a necessary component of a healthy, sustainable lifestyle. Research shows that regular holidays improve mental clarity, boost creative thinking, and strengthen personal relationships; these are the hallmarks of a good life much more than a fat savings balance (though I want you to have both).
Here, we work to support you in creating not only financially secure futures but also fulfilling lives in the present. Facilitating holidays and leisure time within a client’s broader financial plan is an effective way to balance these two aims. So, how to incorporate travel into a balanced financial plan?
Interestingly, the process of planning a holiday shares much in common with financial planning:
– Setting Objectives What is the desired outcome (a relaxing retreat or financial independence)?
– Timing When is the ideal time to travel is a bit like, When is the optimal retirement age?
– Budgeting How much should be allocated and saved?
– Protection Is travel insurance in place is a neat parallel to thinking about life, critical illness, or income protection cover?
– Seeking Professional Guidance Just as a travel agent or specialist company or even travel expert website (I love The Man in Seat 61 and Condé Nast Traveller, for example) can take some of the complexity out of this, a financial adviser can help clients make informed, confident decisions about your financial future.
OK, I’m in. What do I do next?
Scheduled PTO does not have to conflict with long-term financial goals. When planned strategically, they can become an integral part of a sensible overall financial roadmap. The following steps can help ensure that travel is both enjoyable and financially sustainable:
Set up a dedicated holiday fund
Setting up a separate savings account specifically for travel enables high net worth individuals or couples like you ring-fence these funds and build them steadily over time. Regular, automated contributions can reduce financial pressure when the time comes to book.
Make the most of reward schemes
Professionals or employees who use credit cards for day-to-day or business spending may benefit from cards that offer travel-related rewards. provided the balance is paid in full each month, accrued points (Amex airmiles, Avios, etc) or cashback can offset costs associated with flights, hotels, or activities,
If you can, pay in advance
The principle of “pay now, consume later” (as advocated in Happy Money, for example) not only reduces the risk of debt but also enhances the psychological value of a holiday. Anticipation has been shown to boost overall enjoyment significantly.
Who says you HAVE to go in the school holidays?
Always consider travelling during off-peak seasons can deliver considerable savings: think, less people/fewer crowds, better rates, and increased availability, all of which can contribute to a more relaxed experience.
Include ‘spends’ as a line item
Unexpected pleasures a local cave experience, an unplanned excursion to a taverna your new friends told you about, daring a new cuisine and ending up with a memorable night out are part of what makes travel special. Including discretionary allowance in your leisure budget helps manage these without disrupting the overall financial plan. If you know you’ll do something daft (it’s half the fun!), plan for it so it won’t a) make you feel guilty and b) push the budget out of shape, and so wreck the ROI from planning all this out properly and safely in the first place.
Last words
You should always make time for travel and time with loved ones. Do it n
PS How about one last incentive to go off and have an amazing experience: email me your address, and Thera will send you your own free copy of Die with Zero to read on the beach (we have 5 to give away)
What are you waiting for? 🙂