Why Your Financial Plan Should Focus on Experiences, Not Just Investments

Learn How to Create a Life-Centered Financial Strategy That Prioritizes What Really Matters

Author

Stoy Hall, CFP®
September 20, 2024

Beyond the Numbers: Why Your Financial Plan Should Focus on Experiences, Not Just Investments

Today, we're going to talk about something that might ruffle some feathers in the financial world. Ready for it? Here it is: Your investment returns aren't the most important part of your financial plan. Shocked? Let's dive in and see why focusing on experiences, not just numbers, can lead to a richer life.

The Investment Myth

First, let's bust a big money myth:

"Investments are just also a tool... None of that matters. It doesn't matter if I get 10 percent if I beat the S&P or not. What matters when I'm investing... is yes, you know, stocks, bonds, mutual funds, ETFs, real estate, et cetera, businesses, et cetera. But also personally, which also means travel, you know, my mental health and my physical health, all of those."

That's right, your investment returns are just one piece of a much bigger puzzle. But for some reason, our industry has become obsessed with beating the market. Let's change that conversation.

The Goal-Centered Approach

Instead of obsessing over returns, let's focus on your goals. Here's a thought experiment:

"If I told you that I'm going to allow you to reach your goal, whatever that goal is, you're happy. Ultimately, that's all that matters. But, what if I told you to reach that goal, really all you need is a 3 percent return."

Would you be happy with that 3% return if it meant achieving your goals? Or would you still be chasing higher returns? The point is, your returns only matter in the context of your goals.

The Experience Economy: Investing in Memories

Let's talk about a different kind of investment: experiences. Here's why they matter:

"I learned early on that for my mother, money mattered a lot and not money. Per se, but being able to buy certain things for me and now as a father, I can understand that, but also need to recognize that gifts and items aren't what's important when it become, when you talk about wealth or financial freedom, whatnot, it comes down to experiences and memories."

Experiences and memories are the true currency of a rich life. They're what you'll look back on and cherish, not the balance in your 401(k).

The Hawaii Effect: Setting Experience Goals

Here's a personal example:

"My family and I, we go to Hawaii every year for two weeks. I know that to do that, I have to make a certain amount of income, right? Not cut down expenses. I need to make enough money to make this goal or this experience for us every year, you know, achievable and doable."

This annual trip isn't just a vacation. It's a concrete goal that shapes my financial decisions throughout the year. What's your "Hawaii"? What experience are you working towards?

The Mindset Shift: From Scarcity to Abundance

One of the biggest challenges in focusing on experiences is the mindset shift it requires. Here's what I mean:

"If you can transition from, I'm spending this dollar and Right. I don't know if I have enough. This makes me feel a certain way to changing it to it's just an avenue. It's just a tool that I need for my goal. It makes it different for you."

This shift from a scarcity mindset to an abundance mindset can be game-changing. It's not about having unlimited resources, but about seeing money as a tool to create the experiences you want.

The Holistic Approach: Beyond Just Money

At Black Mammoth, we believe in a holistic approach to financial planning. That means looking at all aspects of your life, not just your money. Here's why:

"I tell everyone you have to have a fun budget item... Something to do with your mental health is sometimes just having the ability to go do it. Right? Having that flexibility and just do it and it makes you happy."

Your financial plan should support your mental health, your relationships, and your overall well-being. It's all connected.

The Power of a Team

Creating a life rich in experiences isn't a solo journey. Here's my top tip:

"It takes a team to be successful, wealthy journey, whatever you want to call your, your thing, your financial plan. It takes a team."

At our Modern Family Office, we bring together a team of experts to support all aspects of your financial life. Because your life is about more than just money.

Putting It All Together: Your Experience-Rich Financial Plan

So, how do you create a financial plan that focuses on experiences? Here are some steps:

  1. Identify your "Hawaii" - what experiences are you working towards?

  2. Shift your mindset - see money as a tool, not the goal

  3. Create a "fun budget" - give yourself permission to enjoy life now

  4. Take a holistic approach - consider all aspects of your life, not just money

  5. Build your team - you don't have to do this alone

Remember, the goal isn't to have the biggest investment returns. It's to create a life rich in experiences and memories.

Want to learn more about this approach? Check out our No BS Wealth podcast, where we have unfiltered conversations about real financial strategies.

In the end, your financial plan should be about creating a life you love, not just a big bank balance. Let's focus on the experiences that truly matter. After all, isn't that what life is really about?

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