We're spending more on 'bucket list' experiences - but are they worth the money?

By Morey Stettner

Problems arise when couples clash over how much to budget

Americans are spending more on experiences, not things. Along with a post-pandemic surge in travel, there's more demand for concert tickets, sporting events and museum exhibits.

Yet prices for these experiences are soaring, straining the budgets of even the most gung-ho seekers. Seeing an obscure flamenco guitarist perform at your tiny local venue might run $40. Many art museums charge $30 or more for admission. And the average cost of taking a family of four to a Major League Baseball game is $140 including parking and concessions.

You'd think the rising cost of experiences would cut into demand. But so far, we're willing to pay up. In 2023, Live Nation Entertainment (LYV) sold 620 million tickets to concerts and events, its biggest year ever. Taylor Swift's Eras Tour is the highest-grossing concert tour of all time. From restaurant prices to meditation retreats, costs are far outpacing the current U.S. inflation rate of roughly 3%.

"Across the board, we see our clients taking more trips and going to more concerts rather than buying as many things," said Kyle Shores, a financial adviser in Frisco, Texas. "These experiences are getting way more expensive. Clients express unhappiness about that, but they don't seem concerned."

Like many advisers, Shores helps clients set a budget to cover the cost of experiences. He works with them to fund various buckets of cash - starting with high-priority needs followed by wants, likes and wishes.

Problems arise when couples clash over how much to spend on experiences, he says. After covering their non-discretionary expenses (such as housing, food, taxes and insurance), one of them might want to exceed their discretionary budget cap for trips or concert tickets while the other favors a more disciplined approach.

Even budget sticklers may struggle to manage their experience budget. Just try buying a seat to a live performance: You grudgingly agree to pay $65 per ticket, only to find there's a service fee - or other last-minute charges - that boost the final price. Hotels are increasingly adding mandatory "resort fees" that you only discover when finalizing your purchase.

The price of admission

The standard solution is to establish a separate account for fun experiences - from arts and culture to sports and travel. You designate a percentage of your income for experiences and deposit money regularly into this account as part of an overall financial plan.

"I have my clients set up an experience fund that includes travel," said Riki Cooke, a certified financial planner in Indianapolis. "We start by estimating annual experience and travel costs and then set up automatic monthly contributions to that fund."

Cooke may periodically revisit how much to allocate for a client's experience fund, especially as ticket prices continue to increase. For clients in their 30s and 40s, even a seemingly generous experience fund can run dry quickly.

"It's hard for young people with a 'you only live once' attitude to keep that budget in line," Cooke said. "And $5,000 today for a year's worth of experiences is not the same as $5,000 five years ago."

For those with limited funds to spend on experiences, the key is selectivity. On a one-to-10 scale, identify the value of a particular experience compared to similar ones. This can guide your spending decisions.

"It's finding the right balance of experiences within your overall budget," said Noah Damsky, a Los Angeles-based adviser. "Spend the money and budget accordingly to where you get the most fulfillment from each event."

By adopting a more thoughtful approach in choosing only those experiences that deliver the most joy and gratification, you're more apt to feel that your money is well spent.

For example, Damsky cites a client who loves to attend Los Angeles Lakers basketball games and sets aside $500 a year for tickets. But that doesn't buy him much, given the steep cost of tickets.

"He's found that going to a playoff game is much more exciting and has a high level of intensity that's absent from regular-season games," Damsky said. "So he'd rather do one playoff game for $500 than two regular-season games for $250 each."

More: These purchases are '100% worth' the high price, Reddit users say. We asked the experts.

Plus: Progress, not perfection: Gen Z has made some extraordinary financial moves but still needs help

-Morey Stettner

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04-13-24 1022ET

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