I’m typing this blog post from my iPad on a six-hour train trip from Porto in northern Portugal. My wife and I are on a seven-day family vacation with our two kids.
I cherish these moments with our kids because they are not only older, so we can hang out with them, but we rarely get to spend time with them. They both attend school away from home.
Yes, they were both home for the summer. But my son’s summer job was an 80-hour-a-week consulting job, so we barely got to see him. And my daughter was often very tired after her long workdays.
Now you’re wondering what a train and family trip has to do with the title of this blog post, how do you prioritize spending your money?
Travel: Spend or Save?
When I first booked our trip, I realized that we had to make our way from Porto to the Algarve region in southern Portugal.
I thought about renting a car but wasn’t too comfortable with the idea of driving for over six hours in an unfamiliar country. Plus, I’m not a huge driving fan in any event. The plane was an option, but the flight times weren’t ideal. The last option was the train.
As I’ve seen so many times in the past when booking travel, I had the option of choosing between regular or first-class travel. My natural inclination has always been to travel in a regular class.
I’ve never paid for or been in first-class other than the one free airline upgrade I received many years ago. I’m not a first-class traveler. I’ve lived my life knowing that the first-class and regular-class passengers arrive at their end destination at the same time. And if we’re hungry, I can just buy food.
So I have presented the option when booking the train to choose between regular or first class. I was about to click “regular travel” and checkout.
At that moment, it occurred to me that we have a long train trip that starts at 5:40 a.m. We won’t have time to buy breakfast before the trip, and we’ll be much more comfortable traveling in first class. Plus, and most important of all, I can easily afford the $180 upgrade (that was the total price to upgrade all four tickets).
When Is Spending Worth It? How Do You Prioritize Spending Your Money?
The idea for this post came to me when we were served a hot breakfast a few moments ago. My wife turned to me and said, “Wow. This is special. We’ve never traveled first class before.“
I’ve lived my life, from as young as I can remember, as a voracious saver. I’m what Thomas Stanley called in his book, The Millionaire Next Door, a prodigious accumulator of wealth, otherwise known as a PAW.
For the last 20 years, I saved anywhere from 75% to 90% of my salary and business profits and wisely invested those profits in expanding my business, real estate, and other income-producing investments.
I’m not a Dolce & Gabbana kind of person. The idea of spending money on extravagance just isn’t my thing.
If I had to put myself into a category, I would classify myself as a value spender.
My father and grandfather taught me to never buy a cheap mattress, shoes, or desk chair, so I buy excellent quality when it comes to those things. You can read more about that in this post: 11 Wealth Building Secrets You Need To Know
Up and until I bought my most recent car, a Tesla Model S, two years ago, I’ve never bought a brand name or the most expensive of anything.
My value-spending philosophy does not involve buying anything cheap. I don’t buy inexpensive luggage, for example. I’ve tried that before, and after the first few uses, cheap things break. In the end, it takes more time, effort, and frustration to replace them.
Same thing with my real estate. Whenever we have to do a building upgrade, roof repair, or appliance replacement, I always tell my property manager to never buy anything cheap. I always say, “Buy only good quality products from reputable vendors who provide awesome service.”
I built my business with that same philosophy in mind, which was to provide my customers with the best possible products of the highest quality at the best possible price while providing the most outstanding service we could.
So with all the above in mind, and my current travel situation, I’m now thinking …When is it OK to go from being a “voracious saver” and accumulator of wealth to being a spender who is willing to pay for first-class?
Prioritize Spending Your Money Wisely
My attitude towards money hasn’t fundamentally changed because of one first-class train trip, but it has occurred to me that I am wise with most of my spending. Enough so that I can afford to spend in the areas that matter to me and my family.
If the spending will result in better quality without going overboard toward excess, then I should feel comfortable spending on those things.
I’ve prioritized family time and experiences as one of the more important things in my life.
So before writing this post, I jotted down the things that were most important to me, the areas of my life where I believe it’s OK to spend on high quality.
I looked at each of these areas and rated their importance on a scale of 1 to 10 (with 10 being the most important, and therefore, the areas that are worthy of prioritizing spending in excess where required.)
This comes back to the popular expression: you can give someone a fish, or you can teach them to fish for a lifetime. I will spend on as much education as my children want or need. If either my son or daughter wants to go to graduate school, then I am fine with that. In fact, without being an overbearing parent, I will encourage them to continue with graduate school, so, education is definitely an area where I prioritize spending.
Travel and Family Experiences: 9/10.
When we travel, I like a clean place with a large comfortable bed. This never means spending on the most expensive hotels. In fact, over the last couple of years, I prefer to stay in Airbnbs. When we’re in an Airbnb, I feel and live like a local. Best of all, I look for a place with extra beds and bathrooms with larger kitchens and all of the conveniences of home. I’ve prioritized the number of vacations we take a year and the quality of those vacations. You can also stash some of your resources as you enjoy your dream vacation along the best beaches in Fort Lauderdale, for example. That’s how I was able to justify traveling first class. Here’s also the awesome, reasonably priced place we stayed in Lisbon.
I value entertainment because it’s something I get to do with my wife, and possibly kids. I’m fine to spend money on a Broadway play or a 10-hour private travel excursion in Porto, Portugal, that took us on a boat tour of the Douro wine region and a visit to multiple vineyards and small towns in the region. In case you’re wondering, here’s the trip we took. I highly recommend it, the views were amazing.
I believe in healthy eating, so we buy as many fruits, vegetables, and quality meats that we can. We shop at Costco whenever we can because I like the quality of their products and produce and believe in their brand. Incidentally, but not coincidentally, I am also a proud Costco shareholder.
I’ve tried buying cheap clothes before, and I’m just not comfortable with them. At the other end of the spectrum, I did buy a super expensive suit one time, and I didn’t understand the value for the dollar.
Housing and a car (more on that below) are two areas where I think we spend too much. I own a nice four-bedroom home, a three-bedroom cottage, and a four-bedroom tropical home on the water in Florida. I’ve been able to justify the Florida home because I’m now renting the home on Airbnb when we’re not using it. But overall, owning three homes is something I personally find excessive.
I regret buying the Tesla I’ve now owned for three years. I bought the car at a time when I was doing a lot of traveling around the city and justified the purchase based on the potential gas savings. But now we’re out of town a lot, and we generally take my wife’s car when we go out.
I find it hard to justify the fact that I spent almost $120,000 on a piece of metal, which sits in my garage most of the time and I use once a day to go to the gym and possibly grocery store. My hope is that we move into the downtown core on the subway line in the next few years, at which point, I’ll get rid of my car completely. Don’t get me wrong, I love the car, and it’s awesome to drive. But at this stage, I don’t need anything like the car I currently own.
For whatever reason, I have a hard time spending money on an expensive restaurant. I prefer to eat at home when we’re not on vacation, and I’ve never understood, or been able to justify, spending excessive amounts at a high-end restaurant. I, unfortunately, go out too much, and it bothers me every time. To make it worse, most restaurants add too much salt, and I eat too much, which makes me feel even worse about the experience. I’ve told my wife many times that my favorite food is her cooking!
Fortunately, both my wife and I are on the same page on this one. We both got beautiful watches as wedding presents, and we haven’t spent more than $1,000, in total, on jewelry in the last 25 years, so that is definitely not an area where we prioritize spending.
Well, there you go. I’ve prioritized spending in the areas in my life where I spend the most money and categorized each of them so that I now have a better sense of when, and where, I should be fine to spend more – and when to cut back.
So how do you prioritize spending in your life? What’s most important to you?
If you liked this post, you might also like this one: How Do You Know When It’s Time to Sell Your Business? It’s Not All About the Money.
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