With Holistic Personal Finance about ready for release, it’s time to start sharing it with you. Its purpose is to help you plan your spending around the life you want to lead rather than your income. So I’m starting a new series of holistic spending plan posts to inspire and encourage you think more about how you spend your time, health and money. Starting with an Overseas Vacation Holistic Spending Plan.

Vision, Mission, Virtues

A holistic spending plan starts by defining your long-term vision, medium-term mission, and the virtues that will get you there.  It’s the step that you take before determining your goals.

Vision

Your vision statement is an expression of what your ideal universe looks like. Something inspiring enough to form a firm foundation to work from and towards over a five to ten-year timeframe. Someone who wants to travel might have this vision:

I am a citizen of the world, confidently travelling to new places, meeting people and learning new things. I understand there is more to life than me.

Mission

Your mission statement explains what you are going to do and why; it’s a three-year milestone on the way to your vision. Our traveller might say:

As I travel I reach out to those in need, who help me put my life in perspective. I act on what I learn.

Virtues

My Project Worthwhile Life framework is built on Virtues, defined as centres of excellence. I prefer Virtues to values because they are works in progress (overlaid with notions of honour, integrity and character) whereas values have become the cost or price at a given moment. Virtues are like your GPS, ruling out options that won’t help you fulfil your mission or achieve your vision.

Given their vision and mission, our traveller may have the Virtues of Courage, Openness and Philanthropy. They may also include Freedom, Environment, or Connection.

Goal

You can have as many goals as you like, and they can be for as long or short as you want, but most people make them for a year. Our traveller potentially has a long-term vision of almost constant travel, perhaps for work. Or maybe their vision is broad and inclusive, based on travel to gain exposure to other cultures and ways of thinking.

For our purposes, the SMART goal:

Save $5,000 for a charity trekking adventure and raise another $5,000 as a donation by 31 October 2018.

This goal has elements of time and money management as well as learning new skills and fitness training, but for today we’ll just focus on the money.

Basic Spending Plan

We’ll start using a basic proportional plan developed in 1912 [1], with an after-tax monthly income of $3,435, split as follows.

 

Considerations

On the one hand, our goal sets a relatively simple target of saving $417 a month for the trip, with a more complex one of raising $417 through a schedule of activities that might include trivia or movie nights, sausage sizzles, or feats of endurance.

The savings target of $417 is 12% of monthly income, which at first glance seems a simple matter of reducing all costs by 12%. However;

• Food costs may seemingly be cut by reducing fast foods and increasing consumption of slow (home cooked) food, but fresh produce is often more expensive than takeout.
• Housing is a fixed cost that can’t be reduced without moving house, so a further $82 of savings must be found.
• Clothing is an area where most of us can easily overspend, so this is a good area to cut costs.
• Operations are an area where costs can be reduced relatively simply by reducing consumption of utilities (gas, water, electricity), computer and phone data downloads, phone calls and any cleaning or yard work services. It requires an ongoing focus on things like turning lights off, and perhaps some household maintenance such as changing the tap washers to stop leaks.
• Happy Life is the money left over when you’ve met your needs, and where goal related spending usually comes from. If there isn’t already an uncommitted surplus, trip savings might require something extra like giving up piano lessons for the year.

Potential Overseas Vacation Holistic Spending Plan

You’ll make other changes according to your particular circumstances, but here is one potential spending plan:

 

It might only be 12%, but the Overseas Vacation Spending Plan quite ambitious. Which is why your statements need to be compelling – when you are looking at that cute top you need a vibrant vision to help you put it back on the rack and leave the store.

Outcome

I think setting and achieving goals is an important component of a happy life (if you hadn’t already guessed that). Our traveller could potentially gain as much benefit from twelve months of saving, fundraising and increasing their fitness as they do from their two-week charity trek. Not to mention a lifetime of memories, as well as new healthier habits, tastes, and friends.

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[1] Bruère, Martha Bensley, and Robert W. Bruère. 1912. Increasing Home Efficiency. New York: The MacMillan Company.

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