I am typing this post on a balcony in Prague, in the Czech Republic. On a balmy summer evening. How cool is that?
Oh, and after returning from a scrumptious dinner at a Michelin star restaurant, La Boheme Degustation. Needless to say, the meal was not inexpensive.
This got me thinking …
How I currently fund my travels
I save for my travels in two separate accounts – one that I use for ‘spending money’ while I am overseas and one for serious costs such as airfares and accommodation.
The account for spending money does not accrue great interest. But it has no foreign exchange fees and comes with a debit card that can be loaded with different currencies. So I only transfer money on a weekly basis here when I have imminent travel coming up and while I am travelling. I work out approximately how much I need for the holidays and start automating weekly transfers accordingly.
The second account (which is really my travel account) does accrue good interest. I transfer a weekly amount irrespective if I have anything planned. So it is replenished constantly. And ready for my next lot of travels, whenever it may be.
This account is non negotiable – that is how important travel is to me. I don’t want my finances to prevent me from travelling whenever I feel like it. Just as I always have a valid passport. Sure, my work schedule may prevent me from travelling at the drop of a hat. But I don’t want to, ever, be constrained by my lack of funds.
What happens now when I am on holidays?
Generally, by the time I leave the country, I will have already paid for the expensive items such as flights and accommodation plus any pre booked events. I only need money for food, transport and sight seeing expenses while I am travelling. This money then comes out of my spending account. Which is funded. So I don’t draw any money from my usual everyday account while I am on holidays.
While I am away, my everyday account will continue to perform as per usual ie automated weekly deductions to the emergency fund, investment account etc will continue uninterrupted. And any bills that are direct debited from this account or my credit card will also continue as per usual.
Most importantly, my weekly pay cheque will continue to be deposited into this account while I am on holidays.
That’s correct – I get four weeks paid leave per year. I have never done unpaid leave before. If I travel for more than four weeks, it means I did not use up my leave entitlements the year before. Or I have long service leave available.
After I return from my travels
Any money left over in the spending account will be transferred to my emergency fund.
And that weekly amount I was depositing into this account will now be available for the emergency fund which is very close to funding 6 months of expenses.
So … when I retire …
What happens when I retire? That is, I will not have any consistent income like a pay cheque. Yes, I may have the odd dividend arriving from my shares portfolio but that is hardly consistent at the moment. Hopefully, my shares portfolio will grow to a bigger pie by the time I retire in the next decade.
But the question remains – how will I feel if I cannot replenish what I have spent?
I know intellectually, that my nest egg should provide for me – I will not retire unless I have a certain amount saved up. And whether I use the 4% rule or be more conservative and use 3% or 3.5% – that is all conjecture at the moment.
And I have budgeted overseas travel in my plans. I only travel every second year now but I can envision myself travelling every year if I don’t have work commitments.
But psychologically, how will I cope? I can justify spending money (within reason) now, knowing very well that I am still getting paid while on holidays. And that I have a job to return to which means more incoming pay cheques.
So I find myself pondering this …
Should I travel as much as I can now, while I can spend $250 on a dinner, knowing that I can replace it? And while I am in good health and can walk happily for miles?
Maybe I should focus on the expensive routes and cities (that’s you, Scandinavia & western Europe & dare I dream it – Antartica?) while I’m working. And leave Asia and South America until I retire.
Maybe I should have my fill of Michelin star restaurants now. And what about cooking lessons? But I have always dreamed about cooking in Tuscany or Provence – join one of those insanely expensive tours where you stay in a magnificent historical house in the countryside and cook and eat.
Will I still want to travel or will I not enjoy travelling as much if I cannot spend money on experiences that I value? If I have to question every expense, justify every dollar …
Needs and wants change …
Perhaps I am worrying needlessly. After all, what I think I want when I retire may not be what I want when I do finally retire.
For example, on this holiday when I was in London with my niece, I was much happier spending time with her than gallivanting about town, attending shows and eating at trendy restaurants. Which is absolutely what I would have indulged in if my niece were not available. And it was what I did on previous visits before she was born. I did do those things on this trip, just not as much as I did on previous trips.
So who knows … I may tire of eating at overseas Michelin star restaurants; I may give up that dream of joining a culinary tour to Tuscany or Provence; maybe the need to visit Antartica will fade …
After all, I cut out my daily takeaway cappuccinos when the need arose. Perhaps travel experiences will be not be any different.
And there may be new dreams – like spending each summer with my niece or exploring mini retirements …
Sigh …. I think my FI date just got pushed further away …
Am I over thinking this? Maybe. But it’s best to think out scenarios and prepare for them. At least, anticipate that there may be a problem.
And start thinking about how I would react or respond. And perhaps explore if some other contingency plans can be forged.
How about you? Do you have an expensive hobby that you worry you may not be able to fund once you retire? Am I thinking this all wrong?