"Goals are dreams with deadlines" -- Diana Scharf

Wednesday, March 20, 2013

Topics in Personal Finance: When Is It Okay to Change Your Plans?

Do you remember those Southwest Airlines commercials with the slogan, "Wanna Get Away?"  My answer to that question is a resounding, "Yes, please!"  After months of dreary winter weather and several stressful periods at work I could really use a vacation. 

Yesterday, Mr. W. forwarded me a Groupon email for a fantastic deal:

From $999, six-night, eight-day Ireland vacation with rental car, round-trip airfare, and six nights of accommodations.

The timing of the Groupon deal seemed eerily perfect.  Within the last week, we've been fantasizing about visiting Europe.  I've never been abroad at all, but Mr. W. spent a summer in Ireland and loved it.  He's had a hankering to return ever since.  We always assumed it would be far too expensive for us to consider in the foreseeable future.  But here is an email telling us that we could visit the Emerald Isles for less than $1,000 each.  Sign us up, right?

But here's the rub: our financial plan doesn't include any major vacations in the next year.  In the short term (2013), it includes building our nest egg, increasing our retirement contributions, and learning about investments.  In the longer term (2016-2017), it includes buying a starter home.  Our plan does not say anything like, "Book an expensive European vacation because you're tired of the snow and have been working long hours."  Dang it -- how did I neglect to include a luxury vacation in our plan?

The Groupon deal was tempting.  It still is, honestly.  And I'm sure I'll still be fantasizing about it until the purchase period closes.  Ultimately, we decided not to take advantage of the deal, but we did seriously consider it. 

This occurrence caused me to wonder: "Under what circumstances is it acceptable to stray from our financial plans?" 

In some circumstances, we might be forced to change our financial plans.  Perhaps there is a change in employment, an unforeseen medical procedure, or a family emergency.  All of these could require us to delay our financial goals, dip into savings, or incur debt. 

I'm not really thinking about these forced changes, because they are out of our control.  Rather, I'm thinking about instances when we decide to stray from our plans.  When is it okay to make a major change and throw financial plans out the window? 

Here is a list of a few reasons that would justify a change in our financial plans.  Everyone's list will look different, so I'd love to hear your input, too.

  • Change in priorities/lifestyle: We're newlyweds in our mid/late twenties, and plan to start a family in the next four-five years.  Right now, our biggest financial goal is to save for a home.  But if we start a family sooner, our priorities would definitely change.  For instance, the money we are currently saving for a home would be used to meet the baby's needs first.  And we would discontinue the frills in our budget...things like pricey fitness classes and most discretionary spending.  Likewise, if we decide not to have children at all, we might spend more freely. 

  • New opportunities for growth: We've always held open the possibility of relocating if the right career opportunity presents itself.  We haven't included relocation in our financial plan, but there would certainly be a financial implication if we were to move. 

  • Change in assumptions: Our current financial plan assumes that our income and expenses will remain level for the next year.  If our income and/or expenses change drastically, our plans will also change accordingly.  For instance, let's suppose that we had received that Groupon deal and were simultaneously notified that one of us would be getting a 25% raise (not the case, but it would be nice).  We might have sprung for the vacation because we would have seen minimal net impact to our bottom line. 

 What situations would cause you to change your financial plans?



  1. Great topic. One of our biggest challenges has been getting out of the mindset that even though we *have* money saved, we can't just spend it on tempting things that come up -- it's SAVED for a reason. That said, I think we would/do make exceptions if it's a truly unique experience, that's not completely out of the realm of our budget. For example, we'd splurge for broadway tickets or for a rental car + day trip, if they're things we've been wanting to do and a open schedule and opportunity presents itself (though, being in NYC, it's a fine line regarding what can be counted as a unique, once-in-a-lifetime opportunity!) We want to be frugal, not overly-deprived, after all. But saving is definitely our priority these next 3+ years.

    On the travel thing, we're in a similar boat in terms of kids, etc. so there are a few places we want to check off our travel bucket list before that stage of life comes along. So, we've "budgeted" for a big trip or two a year.

    (Oh, and my husband also spent a few months in Ireland! He studied abroad in Cork. He definitely wants to go back; I was in Paris, though, and I think a return trip there takes precedence!)

    1. I really like your approach of making room for unique, one-of-a-kind opportunities that don't totally blow the budget. Like you've said, the idea is to be smart about money, but not to end up feeling deprived. It's all about balance!

      We already have plans for this year's tax refund, but we've decided that if we get a similar amount next yet, we'll use it to take a fun vacation.

      And it's too funny that your husband also spent time in Ireland. Mr. W. was in Galway, I think. But I agree with you -- Paris should take precedence. Better food, for sure!