Updated on 07.30.08

The Value (and Cost) of Experiences

Trent Hamm

the 4 hour workweekOne major theme I’ve observed in a large number of recent personal finance books and articles is the idea of valuing experiences over things. For example, it’s more financially sensible to lead a spartan life filled with many memorable experiences than it is to subscribe to the consumer lifestyle. I’ve hinted at this concept several times recently, in my discussion of saving to splurge as well as my review of The 4-Hour Workweek.

On one level, this makes a lot of sense. In your final years, you won’t want to look back on a life that was spent accumulating stuff. Instead, you’ll want to look back on a life well lived, one filled with all kinds of interesting and valuable experiences. Life isn’t about the stuff you have, it’s about the things you do.

There’s only one problem with this philosophy. It’s just as prone to overspending as accumulation of stuff is.

I think back to the amazing honeymoon I had with my wife in the summer of 2003. We went to London, stayed in a hotel room overlooking Hyde Park for a week, and strolled to everything we wanted to see in the city. Then we stayed in Manchester for a few days, then a few days in Inverness, then a final night in London. It was unforgettable, but we spent money like it was water on the whole trip – the total bill ended up being in the low five figures. The summer after that, we spent about a week and a half in the Seattle and Victoria, B.C. areas, spending about $4,000 on a very memorable trip.

In short, the “experience”-based lifestyle is just as prone to overspending as the “stuff”-based lifestyle. You can just as easily blow thousands of dollars on your home entertainment center as you can on a memorable trip.

The key to keeping the experience-oriented lifestyle within reason is the same as keeping the item-oriented lifestyle in reason – frugality. Just as with shopping for the best deals on items, you can also do some careful planning and get the maximum value for your dollar when it comes to memorable experiences. Here are some ideas.

Don’t set the bar for enjoyment beyond what’s reasonable. My wife and I were in great danger of doing this with our London trip – we set the bar for memorable experiences pretty high with that one and we tried to compete with it for the next two summers. While it’s great to occasionally have a truly monumental experience, don’t try to make every other experience match up to it.

What really worked for us was spending three straight summers since then with only extremely modest trips – a camping trip to the Great Lakes in 2006, nothing at all in 2007, and a week along the shores of a nearby lake in 2008. Those experiences were highly enjoyable but didn’t break our finances, either.

Use the peak-end rule to your advantage. The peak-end rule states that your later judgment of an experience is mostly made up of the peak of the experience as well as how you felt at the end of the experience. That means that a trip where you jam every day full of activities isn’t really going to build a ton of great memories. Instead, make the days more leisurely and focus on having two great experiences – one in the middle of the trip and one at the end.

This actually works. My memories of the Seattle trip are really defined by two experiences – visiting Butchart Gardens (peak) and visiting an amazing bonsai garden (end). My memories of our London trip are mostly defined by visiting Parliament (peak) and a long train ride from Inverness to London where my wife slept on my shoulder and I looked at the countryside (end).

Fill your life with lots of enjoyable smaller experiences. Instead of blowing huge amounts on jaw-dropping experiences, fill your spare time with experiences that fulfill you deeply without emptying your bank account. Spend more time with your kids. Explore the nature near you. Go on shorter trips and discover the beauty and activities available in your own state that you’ve never discovered. Try some new activities that are outside of your comfort zone wherever you are.

For me, the most memorable experiences of this summer are ones that cost very little: playing Calvinball with my son, rolling over and over in the grass with my infant daughter, going to dozens of little community festivals and participating in the cultural activities, biking to the park regularly for family picnics, and so on. These things didn’t have much cost at all, but they’ll be what I remember from this summer and they’ll be very happy memories, right along that top shelf with visiting Parliament with my wife.

Why? The real key to making memorable experiences isn’t in blowing wads of cash on amazing peak experiences. It’s in figuring out what truly makes you happy and making that central in your life. I can name on one hand the things that make me the happiest – writing, playing with my kids, cooking and enjoying good food, and reading. Those things make me happier than anything else, and when I surround myself with them, I find tons of great and memorable experiences without spending much at all.

In the end, then, the real key is to find the elements of your life that make you happiest and make those elements the center of your experiences. The best part is that it doesn’t have to cost much at all and it will put you on the path to leading a memorable life.

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  1. I take a slightly different stance with regards to my past experiences, and travel experiences in particular. I’ve traveled extensively, including to some rather remote and exotic locations. I now regard those experiences as possessions that can never be taken away or repossessed. Furthermore, I don’t need any more of those “possessions,” anymore than I feel I need another couch.

    I feel extremely lucky to have seen so much of the world. But I’m done with that; I don’t need to do it again. This isn’t a cynical, turn-my-back-on-the-corrupt-world sort of attitude. But it does stand in contrast to the impulse you mention about having to top your last peak experience. I look back on all the trips with great pleasure and feel that one of my major goals in life has been accomplished. Now I’m on to other goals, and voluntary simplicity is one of those goals.

  2. Frugal Dad says:

    I haven’t had the pleasure of traveling internationally much, but I like the way Tim Ferriss does it in the book you referenced, The 4-Hour Workweek. Ferriss takes extended vacations to places sometimes slightly off the beaten path and opts to rent an apartment or similar living quarters rather than staying in hotels. His YouTube profile has a few videos from his travels.

    This must be a fun lifestyle, but one that is probably not easy to pull off with kids (although some have done it–Millionaire Mommy Next Door comes to mind).

  3. Johanna says:

    I’ve wondered before, but never bothered to ask, whether you are still able to look back fondly on your luxurious vacations even now that you’ve had to face their financial consequences. From this post, it sounds like you are. Is that right?

    If it is, then I am crazy envious of you. I would never be able to take a trip like that without worrying the whole time about spending so much money. Fortunately, budget travel can be fun too, and I’ve seen some amazing places that way, but sometimes I wish I could turn off my sense of guilt long enough to go all out.

    Also, since you linked to them both in the same post: The peak-end rule is exactly why Jenny’s weekend trips to Europe make perfect sense. The value of an experience is independent of how long it lasted, and three days in Paris cost less than ten days in Paris, even if the airfare is the same either way.

  4. Bethany says:

    Great post! As a grad student, my funds are pretty limited, but I prefer to spend them on experiences like meals or drinks out with friends or trips. I’ve definitely learned that amount of fun and memories is independent of the money spent or luxury of the locale. Some of my favorite travel memories are staying at a hippie hostel in southern georgia for 3 days, doing a chicago weekend on the cheap with 5 other women, and driving from my then boyfriend’s place in LA to Joshua Tree national park. I love these photos just as much as more pricey trips like my 3 weeks in London in college. I also like to arrange my expectations around the people I will be with – then I’m never disappointed.

  5. Macinac says:

    I’m very prudent normally, but a bit of a spendthrift on vacation. The car has to have its gas; the entry fees for attractions must be paid; the kids should order what they want in restaurants; the souvenir t-shirt; the rental canoe; the homemade jelly; the DQ stop to help fight highway boredom: and that’s just for a camping trip within the state!

  6. Shanel Yang says:

    Love that peak-end rule! Thanks for the tips!

  7. snow_drops says:

    My approach is a bit different. I usually go without any overnight trips for several years. Lots of activities are available close to home.

    But when we fly out to some place far, I would want to make the most out of the whole experience. So, I set a generous budget for that trip. It works for me.

  8. We’ve been on several nice trips. We’re able to do this by not really caring where we go, or even when. Every so often I’ll check out various travel deals, and when something pops up that is cheap and interests us, we’ll go for it. We’ve gone on an 11-night Celebrity cruise for less than $600pp (plus tips, gas to get there, etc.), two-week trans-atlantic cruise for under $1k pp (plus airfare, hotel, rental car costs, gas, but still…), multiple trips to Myrtle Beach and Pigeon Forge/Gatlinburg for virtually nothing (just do one or two timeshare presentations a day, they’ll practically pay us to vacation there), day trips all around, etc.

    We also keep costs down by doing a lot of research. Why pay $300 or more per night to stay in Barcelona, when you can pay around $160 a night for a nice room that includes a 24-hr buffet (even included sodas and beer, though I don’t drink beer)? In Alaska we could have paid $100 per person (there were three adults plus one child) to ride up to the Yukon, or pay about $100 total to rent a car and fill it up with gas (and have a much more memorable trip). You can fly on a nice top-rate airline, or go with a budget airline for much less. Book a tour with a ton of other people going, or catch a shuttle and explore the scenery on your own.

    We actually moved to where we live now just because of the experiences we envisioned our kids having. We’re close to several state parks, Chattanooga is an hour drive, we have a huge backyard with creeks out back (one runs year-round, other just most of the year), etc. There’s all kinds of things for our current and future kids to do, lots of memories to be made. And we won’t have to spend a fortune either.

  9. guinness416 says:

    I think this is one area in which 4HWW really hits the nail on the head – extended travel and flexibility with dates can save a ton of money and be far more enjoyable. We travel reasonably widely (five countries last year), including home to Ireland every christmas, when it is at its most expensive to get there. I don’t begrudge or stress about any of the money I spend travelling, but if I had more flexibility and more vacation time I could fly off-peak, have more options in terms of last minute travel, spend more time with various family members abroad, and hit more places in one shot.

  10. WonderlandAnn says:

    I love that bonsai garden. Tiny trees!!

  11. Joe says:

    Peak-end rule is really something to consider when planning a trip. I traveled a great deal when I was young because my father was regularly posted overseas. I loved those vacations, but I think I’m in the same boat as Kate (post #1).

    I I’d rather travel to state parks than see the Alps because I can take more friends along for the ride… and I can easily revisit all of the places that I fall in love with. Traveling can be terribly overrated. Especially for frugal folks I think it can be pretty disappointing and stressful because you will always spend more than you budget.

  12. clint says:


    I have just read a book called Enough Is Enough: Making the Decision to Live Debt-Free (Paperback)
    by Cheryl Carson (Author) She go’s into some great detail of adjusting our lifestyle to our “real” income to get out of debt. It is kink of the oppisit of the 4 hour work week.

    I think it is worth a read and a review.

    Thanks for your thoughts.

    Amazon has it for like fifty cents.

    Clint lawton


    › 11 used & new available from $0.40

  13. Michael says:

    Thanks for trying to compare apples to apples. “Experiences” benefit from selection(?) bias when compared to tangible items. It’s more fair to compare great vacations to the great parties thrown on a nice deck, and to compare bad vacations to that big-screen TV.

  14. Another Personal Finance Blog says:

    Coincidentally, you brought up what seem to be two very memorable moments from your past in your previous post. Your tenth and twentieth birthdays. Listening to the radio and riding a bike are two very frugal things to do! Hope you create some more low-cost memories on your thirtieth.

  15. aussiegal says:

    I would love to be able to travel…..I would also love to own my own home. I’ve been saving like crazy but I’m scared I will squander my hard-earned cash on a 2 year holiday around the world and come back with absolutely no $$$$ at all. Likewise, if I buy a house, I’m scared I won’t ever be able to travel outside of Australia for the first ten years of home ownership. I guess what I’m asking is how do you multi-task your savings?

  16. Dave says:

    Certainly, you could not have planned on a long train ride home with your wife on your shoulder being the most memorable moment on the trip… sometimes I think it’s just throwing darts at the wall and you get one or two that really hit.
    I remember my last vacation, I selected a “snorkeling and dune buggy” excursion, and found that the best part of the day (and indeed, the trip) was the lunch they served us on a secluded beach during that excursion.

  17. Grace says:

    My sister and I got to talking with our parents about the best times we had growing up. We both chose one particular summer where we picnicked nearly every day at a nearby lake, where our dad taught us to swim, and where the whole family enjoyed just being together. Our parents were amazed because they remembered that summer all too well: my longshoreman father was on strike, they weren’t eligible for welfare or “abundant foods” (the precursor to food stamps) and hot dogs with potato salad were all they could afford to feed us–ergo, all those picnics!

  18. Valuing experiences over things is a philosophical perspective that really has nothing to do with personal finances. Learning to be content with what you can afford (things or experiences) is a financial perspective.

    Best Wishes,

  19. I have first hand experience with the high costs of experience – I ran up (and subsequently paid off) $67,724.89 in credit card debt, and purchased almost no things! Almost all of it was due to international travel.

    However, I have since changed my ways – not by cutting travel (never!), but by doing it cheaper. I believe that is cheaper to spend a day traveling in most countries abroad, than it is to spend a day just living in America, and certainly far cheaper than travel within America/Europe. My main memories abroad are not the tourist sites or “must do” activities (which I tend to do out of obligation), but just simple things like wandering down the streets, the everyday sights, the smells, and most of all the people. Which are all free!

  20. I think my philosophy is to enjoy people/relationships more than stuff OR experiences. When my husband and I go away by ourselves, I always say that I don’t care where we go as long as it’s somewhere with him, and that’s the truth.

  21. Sam says:

    Isn’t enjoying people/relationship qualifies an experience? The peak end rule thing is a nice concept! Something I’ve just discovered here. Nice post.

    Fix My Personal Finance

  22. OneLoveTwoAccounts says:

    I’m sorry to hear so many of you say the peak-end rule is the maximum enjoyment you can find from vacations – especially you international experiences. My first international trip was Mexico when I was 15 (ok, apparently I was in Canada before I was 2 but my early memories don’t go back that far), and I remember every day of that 10 day trip. It was HUGE for me. Since then I have

  23. OneLoveTwoAccounts says:

    (since then I have apparently been cut off by my browser, but lets try that again!) Since then I have been to 7 other countries, some of them as 3 day trips, some of them as 21 day trips (Australia & New Zeland) and I can talk about these trips for HOURS because I have so many powerful memories of them. I think limiting yourself to two “big” experiences on a vacation may cut down your costs while your there, but I would submit there’s a good chance you’d be left with the feeling you just touched the surface of that place and have a strong longing to go back – which limits the places you travel if you end up returning in just a few years. Then again, my reason for taking interest in frugality is because I want to spend a year on the “residen-SEA” when I retire – it’s a cruise ship you live on and it comes into port all over the earth – so maybe my perspective is skewed.

  24. Laura in Atlanta says:

    Snowdrops: “But when we fly out to some place far, I would want to make the most out of the whole experience. So, I set a generous budget for that trip. It works for me.”

    ooh . . . ‘blowing’ money while i travel . . . ooh, I’m so guilty of that. However, I don’t regret it for a moment! Please note though, I tend to BUDGET for that sort of thing.Making a generous budget indeed. I tend to take into consideration when planning the trip, the fact that i am gonna wanna do something pertinitent to the area, that I havent thought of before leaving the US. On a once in a lifetime trip to Africa, I had a once in a lifetime opportunity to go on a 3 hour hot air balloon ride over the Masaii Mara at dawn. I didnt care how much it cost, I was GOING! ;-) It ended up being $600 with champagne breakfast incl – but even if it had been over $1500 (which is what I thought it would be) I would have done it. I mean . . . come on!!! ;-) How often do you get a chance to see the morning rituals of elephants and giraffes from a hot air balloon in Kenya? It was MIND BLOWING, and well worth every single penny, and is a memory that I cherish! So, yes . . . that is my weakness. Traveling. There is ALWAYS something that pops up that I want to experience!

  25. Susy says:

    I agree with Joe that traveling can be overrated! I often come home much more tired. I prefer leisurely vacations camping & sitting by the fire.

    That being said Mr. Chiots and I are saving up for the trip of our lives, a month-long cruise/tour of Alaska. We’ve been saving for 5 years and have a few more years to go, hopefully we enjoy it as much as we think we will.

  26. Happily Ever After Investing says:

    That peak end rule is great advice. Thanks for the idea.

    And gotta agree with Guinness and Frugal Dad that the 4HWW’s idea of mini retirements on the cheap is great stuff – in fact at some point you may be able to do something like that.

  27. Karl says:

    What I have begun doing is budgeting a certain amount of money towards vacation/travel each money, and socking it away in a high interest savings account. Thus I always know how much I have to spend, and approximately how long it will take to save up for a desired vacation. I’m saving right now and I’m not even sure what it will go to, but once I do, I’ll be happy in the knowledge that I am already well on my way to being able to afford it. It also allows me the opportunity to take advantage of any sudden vacation opportunities (say friends invite me on a camping trip or whatnot) if they arise since I can choose to use my vacation money.

  28. Karl says:

    Grammer Correction:
    “What I have begun doing is budgeting a certain amount of money towards vacation/travel each MONTH”

  29. Dawn says:

    Great post – and definitely food for thought. Thanks!

  30. Stephanie says:

    I have trouble paying for travel because it’s just not worth the amount that it costs to me. Some people don’t enjoy travel. I get motion sickness when I’m not the driver, and cigarette smoke makes me sick and seems to be common and unavoidable in most vacation venues.

    So, I spend my extra money on things that I will enjoy in my own home.

  31. Matt says:

    I liked the first commenters idea; my experiences aren’t something that can be taken away or broken (unless I smack my head really hard somewhere). A possession can have great value but unless it actually has use and value to us personally it loose its luster and just becomes stuff.

    Not to mention the experiences don’t necessarily have to be insanely expensive – I’ve taken the expensive trips, they’re fun but they don’t have to be THAT expensive. You mention Tim Ferriss, his trips take him to places like Argentina and Thailand rather than living it up in Paris or London (though I think he’s got examples from London too).

  32. Sophia says:

    When you approach travel from a purely experience based perspective, I think it automatically reduces costs. For example, I would much rather fly coach and make 3 connecting flights to save $500 that I could then spend on something else. That’s also why I never get souvenirs. They clutter your house, they’re unnecessarily expensive, and they rarely accurately reflect the memory they are meant to represent. I also could care less about being in a luxury hotel- I just want someplace clean, safe, and well situated. I plan on spending most of my time out and about soaking up the local culture, and I couldn’t bear to think of my expensive, luxurious hotel room sitting around all day while I’m not there :)

    Lastly, if travel just isn’t your thing, don’t do it. It seems people feel pressured to want to travel, as though it implies being cultured. Paris Hilton has been all over the world and it hasn’t helped her much ;)

  33. louisa says:

    Regarding experiences vs. things, research shows that in general experiences have longer lasting positive impacts on happiness than buying things. I don’t think anyone said they would cost less (or nothing at all) but instead that experiences may provide more value than things over the long-term.

  34. Lisa says:

    I just took a job in the town where my husband and I used to go for our favorite vacations. We plan to buy a house here. I know it won’t be quite the same as vacationing, because I’ll be working there, but we love it so much, I’m hoping that instead of spending money to stay here, we’ll enjoy the perks being here for the cost of everyday living.

  35. “… and cigarette smoke makes me sick and seems to be common and unavoidable in most vacation venues …”

    LOL, so true! I HATE smoke. International travel is my #1 passion in life and I love to leave the country, and hate being here, but in most other countries smoking is rampant and totally unregulated. In some cities (e.g. St. Petersburg, Russia) I swear I can walk down the street and smell like I’ve been sitting in a smoky bar all night. Funny thing is that we invented it! So you can blame it us anyways.

  36. Kate says:

    I have to disagree here. My family takes a “major” vacation to a popular amusement park every other year, coinciding with my children’s eighth birthdays. While there, the birthday child wears a birthday pin and every park employee that sees the pin wishes them happy birthday – the last one received over a hundred happy birthdays! Entire restaurants sing to them. They receive perks and special privileges the entire week. The rest of the family adores the new and exciting experiences we have and we talk about the trips endlessly. This next year we will be celebrating an eighth and an eighteenth birthday, and both children are equally excited about our trip.
    Incidentally, all our clothes are hand-me-down/yard sale/thrift store, our food budget is less than 1/2 the national average for a family of seven, we eat out about once a month, and our cars are well-maintained 1996 models.Amy Dacyzyn said that it doesn’t matter whether you choose to be frugal to afford a large house, a big family, or a fleet of all-terrain vehicles. I choose to be frugal so I can afford to make amazing, over-the-top memories with my kids!

  37. Melissa says:

    Since I have young children, major expensive travel is definitely out. And we have found that the more complicated the traveling, the less fun we all have. My best memories of vacations as a child are not the ones that included a plane trip (and we took plenty of those), they are the ones where we spent time together as a family.

    Trying to live frugally and get out of debt–this year we went to the Oregon Coast for vacation and had the most fun we have EVER had on vacation because we bought a $6 book of “Oregon Coast Quests” which are similar to letterboxing. It took up the majority of our time for days, and we learned a ton, got out into nature, and bonded as a family, without spending money on anything but a tiny amount of gas in the process (they were all fairly close to each other). It doesn’t seem to take very much effort to spend a lot of money, but creating valuable family experiences is much more worth your time.

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