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Just like when planning a trip, managing your finances doesn’t need to be difficult. You just need to have a basic strategy. Here are eight tips to get you started:
The first part of any financial plan is to set goals and to get on the same page as your spouse or significant other. Communication is paramount. If you work together to establish your goals and put them on paper, you are more apt to do what it takes to achieve them. Do you want to put the kids through college, have a vacation home or maintain your lifestyle throughout your 40-year retirement? My wife and I wanted to experience the wonder and joy of Disney World through the eyes of our two children.
Manage cash flow/savings strategy
How much can you afford to spend on the trip? Many factors play into this decision, but you have to decide if the convenience is worth the cost. What type of Disney resort (deluxe, moderate, value), on the monorail system or not, what type of meal plan, peak or off-peak season, flight times, etc. How much do you need to save a month in order to pay for the trip?
This exercise can also be helpful in determining how much you will need to save now in order to live your ideal lifestyle in retirement. What will it take to get there? Rather than examining your income less expenses and saving whatever is left, flip the script. Analyze your income less what you need to save (to achieve your goals), and spend what is left.
Teach your kids
Disney is not cheap. Most people need to save for quite a while to have an amazing trip. Why not instill those values in the kids while they’re still young and impressionable? My wife and I decided to reward chores around the house with money for the piggy banks. We talked to our children about our goal of going to Disney World and let them know that each of us needed to do our part in saving. When we saved up enough to go, we had a family meeting and told them we were $3.55 short in savings (the exact amount in our daughters’ piggy banks). They ran upstairs, grabbed their piggy banks, and said they could help.
Much coordination and research are needed for planning a trip to Disney World, as well as for any financial plan. Read books, scour the Web and talk to friends who have recently traveled there. Don’t get overwhelmed by the enormous amount of information that’s out there. If you organize your travel in several simple steps, you can lessen that feeling.
What may work for you is to organize your plans on a spreadsheet. List the days of your trip, then decide what parks you want to visit based on early openings or late closings. Following that, book your meals, fast passes and character meet and greets. Compare your spreadsheet to the My Disney website and phone app to ensure everything is correct.
With regard to financial planning, developing a game plan requires thoughtful coordination of where you are now with regard to your financial resources, where you want to be and what you are willing to do to get there.
When shelling out a lot of money for a trip that includes multiple generations of family, it might be wise to get trip insurance. People get sick and life happens, so why not pay a small percentage of your trip’s cost to obtain peace of mind? Hopefully, you will not have to utilize the insurance, but it is there just in case (similar to other risk management measures: health, life, disability, long-term care, and property and casualty insurances).
Control your emotions
You may have laid out what you think are the best plans, but then your emotions may be tempted: You may find out that the kids would rather stay at the hotel pool, or you see that you must wait 20 minutes in the hot sun to meet a Pocahontas, or your table may not be ready. But as Elsa from the movie “Frozen” says, “let it go.” Especially while on vacation, don’t let those emotions make you to lose focus on what is most important: fun, quality family time.
With regard to financial planning, you must fight the urge to allow your emotions to gain control. The biggest determinant of long-term, real-life investment outcomes is investor behavior. Have faith and confidence in your long-term financial plan. Investors who don’t panic achieve much better results than other investors who let their emotions get the better of them. Develop a long-term financial plan, block out the negative influences, work with your planner to make any course corrections over time and enjoy your life.
Sometimes planning a trip is the impetus needed to get your estate documents in order. Most people need three documents: will, healthcare power of attorney and financial power of attorney. If you have young children you will need guardianship provisions. Take an inventory of your digital assets. Safeguard that document and inform your power of attorney of its location. Check out ethical wills and family love letters, as it may be something you would like to include with your estate documents.
When you’re done planning and saving, you get to enjoy the fruits of your labor. Live life to its fullest, and be sure to reach the proper balance of work and play.