One Trip Now, Two Trips Later

Why do people travel?

To become more cultured. To see more of the world. To break the monotony of day-to-day life. To post photos online in an attempt to give their friends FOMO. To create memories. All good things.

Most of which seem to be an attempt to be happy and lead a fulfilling life.

In fact, Millennials prioritize travel above most other uses of money. Unlike their baby boomer parents who supposedly prioritized material possessions, they like experiences. (Maybe that’s just because experiences can now be turned into material possessions and shown to everyone you’ve ever met via the perfectly framed social media post.)

But unless someone else is paying for your travels, you can only travel as far and wide as your discretionary income allows. Your happiness from travel is thus capped. Or is it?

What if I told you I have a way to give you two trips for the price of one? It’s true. The only catch is you have to wait.

For example, say you have $1,000 of excess cash in the bank. And say you want to go on a trip that costs $1,000. No problem. Book the ticket and leave tomorrow. Happiness attained.

But let’s also say you fully understand the power of compounding and you know that $1,000 can be turned into $2,000 over a long enough time period of investing.

Over the long-term, the stock market could compound your money at a rate of 10%. So, if you invest your $1,000 entirely in the stock market, it will take, on average, 7 years to double your money.

If you are 25 years old, you could go on one trip now, or two trips at 32.

Many caveats apply. This doesn’t take into account capital gains taxes or the rate of inflation or the possibility that the market crashes tomorrow. But you can use this as a reference point and mental model. Sometimes it will double sooner, sometimes later.

For example, if you had invested $1,000 in the March 2020 stock market crash, it took just one year to double your money. If you had invested your money at the peak of the dotcom boom, it would have taken 18 years to double your money and by then you might be dead. Zero trips.

Don’t let that scare you away, though. That risk is precisely the reason you earn a return. Less risk, less returns.

Even with the risk, there is no rolling 20 year period where stocks were negative:

A Wealth of Common Sense

The trick, then, is balancing immediate gratification with delayed gratification. You still have to live your life and do things.

You might be thinking this sounds a lot like the marshmallow test but for adults. Well, you’d be correct even though that study was proven a bit misguided. Unfortunately for adults, no one tells you about the second marshmallow and it’s probably going to be stale when you get it. In any case, the parallels exist for good reason: delayed gratification has benefits.

How to Maximize The Travel Experience

If we travel to be happy, there is a case to be made for maximizing the happiness of each trip. And this starts well before the vacation.

Delayed gratification is an excellent personal finance hack. It goes something like this:

Studies show that planning a trip and anticipating it in the months leading up to it can be just as meaningful to our day-to-day level of happiness as going on the trip itself. Delaying the immediate gratification of being on the trip prolongs the “feel-good” chemicals of dopamine that our brain produces when we think about the upcoming trip and eventually experience it.

Then, once the trip is over, stumbling across a souvenir is an excellent way to trigger the memories of the trip and relive that happiness. More so than, for example, trying to remember the type of car you rented or the meals you had. Without a cue in your environment after the trip, it will more easily be forgotten.

But trips and souvenirs are expensive. They often must be budgeted for. Saved for. Compromised on. Because we can’t do and see everything we have to pick and choose the locations and activities that we think will provide us the best experience according to our preferences. These will be different for each person.

For example, after some trial and error, I might conclude I prefer a long road trip with my destination being a national park. Someone else might prefer flying to a big city to shop. So we know a bit about the places we want to go and the things we want to do.

Next step is booking it early enough to experience the most feel-good chemicals while not feeling like it is too far away. This is also why several smaller trips through the year might be better than one big one.

Arthur Brooks at the Atlantic offers a few more tips to enjoy your vacation to the fullest: take less photos, avoid the temptation to work, don’t post photos about it, and come home a day early so you have time to re-enter daily life and buy some groceries.

One final tip I have to make sure you savor the vacation even after it’s over is to remember it was just that, a vacation. I’ve known people that visit a city or state and claim it’s the best place on earth and they need to move there. Maybe that’s true, or maybe they just didn’t have any of the pressures of normal life and were experiencing novelty at every turn.

To alleviate this, add some novelty to your own life at home. Use your less dominant hand for tasks all day. Rearrange your furniture. Take the long way home from work for a change of scenery. I’m not kidding. These things will open your eyes and add some of the flavor you normally only get on holiday. They will also increase your perception of time by creating more memories so your life seems longer.

Whatever you choose and wherever you go, just remember that marshmallows have nothing to do with a successful life. Neither do vacation photos on social media.

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More reading:

Your Guide to the Markets in 2022

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An Open Letter to the Dutch East India Company

It’s the only place I know where the longer you stay, the wealthier you become. I can’t say the same for Target, the strip club, or any of my trips to a casino.

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What I’ve Learned from Two Years of Writing about Personal Finance

There’s a million websites out there that will tell you how to invest better than I can and they will show up a thousand spots higher in your Google search anyways. I’m far more interested in why to invest in the first place.

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2 thoughts

  1. This post really made me stop and think. I’ve been lucky enough to go on many vacations in my life, and I’ll be honest; there are many times, I’m on a tropical island, thinking to myself “Is this really it? Is this supposed to feel like the pinnacle of happiness? It sure doesn’t feel like it.” The tip about planning vacations is a big one. Looking back, I do get as much joy just planning the vacation as much as being there in the flesh.

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