You might have heard a lot of people say that travel is the best teacher or it expands you horizons. It is definitely true for me. I have learnt some important life lessons from my travels, be it managing relationships, building a rapport with strangers or looking beyond the obvious. Today, I will write about the financial lessons I have learnt from travel.
1. Your loyalties with services need to change
While, I use the websites and travel apps that I have short-listed as the best (Booking.com for hotels, Skyscanner for flights), I always check other sources as well before I book my travel. And sometimes, it does help me get better deals. For example, while booking hotels in Alaska, I found Expedia to offer better deals.
Same is true for financial services. While a particular mutual fund or tax saving instrument might have given me better results in the past, I do make it a point to evaluate my options while making a new investment decision.
2. Travel test for purchasing new stuff
I like to travel as light as possible (can I travel lighter? Of course I can, and I strive to). I tend to pack only to essential stuff I need on my travels. While, people like to pack new clothes for each day for those “social media” perfect pictures, I am happy with 2 jeans and 1 jacket for 2 weeks.
This mantra I try to apply to my life as well. I call it the “travel test”. Before making most of my purchase decisions, I evaluate whether I would need it while I am travelling. If the answer is no, I then think deeper about if this is something I need or something I want. Of course, there are certain things that you need in daily life but not while travelling. But the travel test, is the first line of test that an expense item needs to pass. Have I been able to stick to this test for all my purchases? The answer is no. But it has definitely helped me to stop buying 50% of the things, which I otherwise would have bought.
3. What works for someone else, might not work for you
While it is a good idea to take recommendations from people you trust, it may not always be the best. When finding out about my next travel destination, I do take advice from my friends who travel a lot. However, I don’t just stop by asking, “Which destination do you like?”. I go a step further and ask them the “why”. Some people love the mountains, while other love beaches, hence, what is favourite for them might not be for you.
Similarly, when taking the decision to invest it is a good idea to talk to your family, friends and financial advisors. But you need to be clear on what their goals are and what your goals are. Just because a fixed deposit worked for our father’s generation does not mean it will work for us too. If your goal is to retire early, you need higher returns on your investments.
When I made the list of my recommended mutual funds, I got feedback from my friends that why a particular fund is not on my list. And my question was, “Did you go through the excel I used to figure out the funds?”. The answer was a resounding “NO”. We, as a generation, are used to quick answers to our questions without figuring out the “why”. While my selection strategy might work for me, it is not guaranteed that it will work for you as our goals can be different.
While there are many other things I have learnt from travelling, but more on that later. Do let me know what you think about financial lessons I learnt from travel in the comments section below.