Make sure you’re balancing the experience and the cost.
A couple of years ago when my older son, Carter, was about 5, we went to Sesame Street Live! with a couple of other families. Carter had saved some money in his piggy bank and wanted to take some with him for candy. So, we got out some change and exchanged it for paper money. At the show, Carter was sitting with two girls about his same age when he spotted cotton candy vendor. My son flagged him down, and when the vendor got there, Carter announced, “Don’t worry girls, I got this!” At which point he paid $16 for about 4 cents worth of sugar and air.
This incident was funny but also a good example of real versus perceived value. Carter and I had a conversation when we took the money out of the pig about how much he wanted to spend, and we didn’t take out all of his piggy bank savings. The value to him wasn’t in the candy itself, but in the experience.
We talk about this very concept with our clients on a regular basis, as we talk about budgeting for lifestyle expenses and other purchases. When planning a family vacation, for example, we’ll help clients predetermine the amount of expense that makes sense before actually making the decision. That way, the value proposition is based on the experience value rather than the tangible value.
You’ve probably heard it said that experiences offer more value in life than things, or possessions. This is exactly the lesson Carter learned that day. Being at the performance with his friends (and being able to buy the cotton candy for his friends) was worth the price of the candy, even if the candy itself was worth far less.
How do you go about determining the experience value of an expense? Things we encourage clients to think about are making memories for the family, once-in-a-lifetime chances, realizing dreams, etc. It might seem extravagant for a couple to take all of their children and grandchildren on a cruise. But once we talk about the amount they can realistically afford spend, the cruise becomes about the value of the experience for the family as a whole, rather than the amount coming out of savings. Extravagant? Maybe. But those family members are left with memories that they can’t put a price on.
What do you value when it comes to experiences? What goals and dreams do you have for you and your family? Whether it’s vacation, tickets to a show or sporting event, or a second home, our team can help you strike the balance between actual value, perceived value and experience value.
1792 Alysheba Way,Suite 201,Lexington, KY 40509
Phone: 859.219.1006Fax: 859.219.1012
First Name (required)
Last Name (required)
Your Email (required)
*Representatives are licensed to offer insurance and annuity products in AL, AR, CO, FL, GA, IN, KY, MA, MD, MI, MO, MS, NC, NH, OH, PA, SC, TN, TX, WV, VA, and WA and are licensed to offer investment products in AL, AR, AZ, CA, CO, CT, FL, GA, IL, IN, KY, MA, MD, MI, MN, MO, MS, NC, NH, NM, NV, NY, OH, PA, SC, TN, TX, UT, WA, Washington DC and WV. This website and its content are not intended for residents of other states. Securities offered through: The O.N. Equity Sales Company, Member FINRA/SIPC, One Financial Way, Cincinnati, OH 45242. 513.794.6794 Investment Advisory Services offered through The O.N. Investment Management Company. Estate Planning Services provided in conjunction with your licensed legal advisor.