Even before the word "inflation" was dominating our headlines causing people to evaluate the opportunity cost of various expenditures, I've always encouraged my clients to think in this manner. What is important to one person isn't to another. Deciding where you want to spend less so that you can splurge in other areas is an important distinction for every person or couple to make. Not everyone is OK cutting back on their daily Starbucks runs so they can splurge on a Mediterranean cruise. However, each of us does have areas that are important to us and it’s essential to know what these are so we can manage our finances wisely to try and create a lifestyle meaningful to us.
Want front row seats for the Taylor Swift concert or need to get the latest iPhone? No problem. But, since we all have a limited amount of money to spend (some have larger pockets than others), then identify and reduce spending in the areas that you won’t lose sleep over. For our family, our health is an area we invest in by purchasing more organic and wild/free range food. It’s costly, especially for a family of 5, but it’s important to us because we've experienced the health benefits. To offset this though we’re willing to spend less on eating out and we don’t buy expensive name-brand clothing.
Here's the other thing to consider. Our life stages can determine what’s important to us at that time. We have three active children involved in sports and theatre so we spend a lot on these areas. However, this stage will eventually phase down as they grow up and move out and we will then be able to shift and reallocate the money to new priorities, which might be on travel so we can visit them. Here’s another example: One of my clients has owned a boat for over 40 years that he and his wife used every summer for family vacations to the lake. Now that their children are married and have teenage kids, the lake trips have become infrequent. The discussion we had recently centered around the cost of maintaining the boat versus selling the boat and then using the money on things that would help them enjoy their current lifestyle, such as more travel or spending time with their children and grandchildren.
Yes, inflation has made our daily routine and lives tougher, but it may be a blessing in disguise as it helps us refocus on how we’re living our lives. It’s okay to splurge but as I often say, everything can’t be a priority so decide which areas you’re willing to spend less on so that you can enjoy the things that matter most to you.