Recreational Investments, A New Word for Expensive Toys

Big recreational purchases are typically a financial eyesore on your bank statement. It can be a task in itself to persuade your partner to buy that shiny new mountain bike. But what if we looked at these types of purchases as recreational investments?

Let’s take a page out of how big corporations look at savings and view these purchases as investments rather than expensive toys. To do this, we need to look at the money we would save by purchasing the product. To call these investments, we should end up with more money in our pocket as a result of the purchase.

Gather the Data

Before we start calling that new kayak an investment, you’re going to need to compile the following information:

1. A detailed report of your expenses over a six to twelve-month period. Most banks have categorized expense reports that are easy to download and should have this information on hand.
2. The total cost of the product that you are looking to purchase. This includes any accessories that go along with the primary product.
3. The estimated amount of uses of the product per year. How many days a year will you end up using the new toy?
4. The estimated duration of each use. How much time will you use the product for each time it’s used.

Once you’ve compiled all the data it’s time to build a business case for your new investment.

Crunch the Numbers

To make our case, we’ll use the expense report to see what we would have bought instead of using the product. The amount of money that is saved by the use of our new toy will be used to justify our recreational investment.

This is the way corporations justify many investment decisions. This approach is used to warrant everything from new manufacturing equipment that expedites production to moving headquarters to a more energy-efficient building. The savings that the additional asset provides is used to determine if the project is worth pursuing.

Let’s go over a high-level example of how a company would use this methodology to determine whether or not to relocate a distribution center.

To save on transportation costs, a company is looking to relocate its distribution center (also known as a DC) closer to its factory. The numbers they looked at are below:

In this high-level overview, we landed an ROI of fewer than two years. Fifteen months is an excellent ROI, the project would likely get approved to move forward.

Corporations typically use an ROI timeframe of two or fewer years to prioritize the expenditure. This is a good rule of thumb to use for our recreational investments as well.

Big Toys as Recreational Investments

Let’s now look at some popular big-ticket items that we can now call investments…

Kayak

Warmer weather brings the human need to be out on the water. What better way to take in the sun the same way the Eskimos did over 5,000 years ago when they created the “man boat“.

This example plans to use this new purchase twice a month from April through October for four hours at a time. Each use would avoid an average of $20 of purchases pulled from Saturdays on the expense report.

Kayak Business Case Data

An ROI of just under 17 months indicates we’ll be saving money in no time. The Kayak is under the target ROI of 24 months and would work as a great recreational investment. When doing your own calculations, keep in mind your numbers may differ.

Bike

What is the perfect way to get your workout in, lower your C02 footprint, and save on commuting costs? A brand new bicycle of course!

To put the numbers together for a bike, we’ll justify the purchase by what we can save on our commute to work. For our case, we’ll assume we will commute 3 days a week from May through September using our new bike instead of taking the subway.

Bike Business Case Data

Having a return in under a year is a no-brainer. A new car likely wouldn’t have this type of return. The bike would be warranting a purchase based on these numbers, making this a great recreational investment.

Camping Gear

There is no better way to escape the everyday hustle and bustle than a few nights spent under the stars. Along with the great mental relief this can bring, camping can be much more affordable than a weekend getaway to a nearby city.

For our camping gear business case, we’ll go camping once a month, rather than having a weekend in the city. Our savings will cover everything that we found in our expense report from eating out to the cost of a hotel.

Camping Gear Business Case Data

A 4.8 month ROI makes camping gear the best out of our recreational investments. Though $400 isn’t cheap, seeing what we would have spent makes this purchase easily justifiable.

Grill

If you’re less into the physical part of being outside, a grill may be more up your alley. After all, what’s better than a few brews and freshly grilled burgers on a Sunday afternoon?

To write our case for our brand-new grill, we will assume we will use our grill to make dinner for the family once a week during the summer months instead of ordering takeout.

Grill Business Case Data

After a little over 5 months, we saw savings by replacing takeout with a grill day. Not a bad recreational investment!

Wrap-Up

If you’re in the market for something that might cost a pretty penny, use this methodology and identify the savings a purchase would bring. You might be surprised by the results.

Not every recreational purchase will be a great business case, so make sure to run the numbers before you click on add to cart.

Have any recreational investments saved you money in the past? Feel free to let us know in the comment section below!