How to Plan for Large Expenses On a Small Budget
Are you planning for large expenses but don't have a huge budget? This problem is something that impacts many people and can be a very challenging concern. Stretching a little money into a big project requires understanding various elements of financial planning and doing what you can to maximize your cash. You may even have to borrow a little money or get help from a financial adviser.
In this article, we'll go over the best way of planning for these significant events without throwing yourself into bankruptcy. We'll include as much information as possible to ensure that you don't feel lost or confused. This information comes directly from financial experts and has been vetted to ensure that it is as accurate and detailed as possible. In this way, you can avoid common faults and errors.
If you have a limited budget, you might feel trapped and unable to plan for those more considerable expenses in your life. For example, if you make between $30-40K every year, it might be hard to plan for a huge wedding, a vacation to somewhere beautiful, or anything else that you may want in life. However, it isn't impossible to prepare for these big moments as long as you handle your cash.
We're not going to tell you that it will be easy. On the contrary, you'll need to take this process very seriously and follow various steps to avoid a myriad of complications. But, just as importantly, you need to plan, plan, plan. We can't emphasize this fact enough! The only way people with a limited budget can pay for more considerable expenses is to plan far in advance and know precisely what must be done to keep on task.
To help you out here, we're going to create a step-by-step guide to help you plan for your significant expenses. We'll go over each of these steps in detail to make sure you understand them. This article may be a bit longer than average, as a result. However, we believe that you'll find this extra information is informative and necessary and that it will help make your planning that much easier.
A Simple Step-By-Step Guide For Planning For Big Expenses
We broke down this process into three simple steps that also include three smaller sub-steps that should help you save up for more significant expenses. Try the first step to begin this process. That may be the only thing you need to do in some cases. Then, move on to the second and third if the first isn't enough. After you're done, make sure you check out the rest of this article to improve your savings further.
Step One: Know That Little Steps Accomplish Much
So, you have a limited budget, and you need to plan for something big. Don't fret! Rome wasn't built in a day, and the Grand Canyon used to be just a river bed before millions of years of erosion. Patience is critical here, and you need to be ready to take little steps to save up for a considerable expense. Typically, there are a few ways that you can accomplish this goal. Let's examine these steps in the subheadings below.
1.1 Know How Much You Have to Spend
Take the big dive and examine how much you're going to spend on this big expense. If necessary, pour yourself a cup of coffee and meditate before you begin. Looking at the sheer scope of such a project can be very upsetting and even depressing. However, you have to face it head-on and be willing to break it down into easily payable elements. Doing so should help make this process easier.
1.2 Gauge Your Timeline
How long do you have to save up for this considerable expense? If you plan enough, you should have weeks, months, and maybe even years. Create a timeline that makes sense for your needs and stick to it as much as possible. There's no reason to panic, either, if your timeline is very short. There are ways to get around a brief timeline: we'll discuss them in more depth below.
1.3 Create a Savings Plan
Once you know the size of your considerable expense and your timeline, work within your budget to create a meaningful budget plan. How much will you have to put away to save up for that enormous cost? You might find you only need to put $50 of your paycheck aside every month to save up for that big purchase. Place your money in a high-earning savings account, and you can make your money even faster.
Step Two: Consider Additional Sources of Income
You've gone over step one, and you have a good savings plan in place. That's great! But you still won't get enough money to pay for your significant expense during your timeline. This frustration can derail your attempts or even cause you to stop trying. Don't give up! There are still ways you can ease this burden and save money more quickly. Let's break them down below.
2.1 Cut Back on Unnecessary Expenses
This step is the one we know most readers will hate. Cut out things you don't need from your budget to save more money. For example, start cooking at home more often and focus on foods you can eat for several days in a row. You may even want to cancel your cable bill and look to inexpensive streaming services instead. Do you have a four-wheeler or boat you never use? Sell or rent them to make more money.
2.2 Find a Side Hustle
A side hustle is a secondary source of income that can add to your budget and save more cash. Don't think of a side hustle as a second full-time job. It might just be working a few extra hours a week at a coffee shop or book store. Or you might get into selling online art or freelance writing. Even if you're making no more than $100 per week, that's $400 a month extra towards your goal.
2.3 Consider Getting Into Investing
Talk to a financial adviser who can take your limited savings and transform them into a bigger budget. A skilled adviser may be able to double your funds in a year, helping to save you real money. Consider this option only if you have some time before making your significant purchase. For example, this option is great for buying a home with minimal difficulties.
Step Three: Try Out Financial Help
You've taken the first two steps listed here, and your savings are growing, and your budget is more flexible. Unfortunately, you're still just a little bit shy of meeting your goal, and you feel trapped and uncertain of how to proceed. That's a common concern, and you shouldn't feel ashamed if you need financial help. Here's a little information that might help you out in this situation.
3.1 Avoid Paycheck Loans
Paycheck loans are straightforward to get and may be tempting to many people. Please don't fall into their trap! This financial source typically has very high-interest rates and can make it very hard to pay them back on time. Try out a personal loan, instead. Many banks are willing to work with people who have poor credit. Credit unions, in particular, can be a beneficial lender for many people.
3.2 Consider Long-Term Borrowing
Fast-track borrowing options almost always come with high expenses and bad interest rates. You may want to consider a long-term loan with more reasonable payment cycles and costs. While it might be tough to pay off a loan for 20-30 years, the amount you pay will be smaller every month. Try to pay more than the suggested minimum to pay off this loan quickly and with less extra costs.
3.3 Keep Your Credit Cards In Your Wallet
You might be tempted to tap into your credit cards and use them to fund your significant purchase. Don't give in to this temptation! Credit cards can be helpful in many financial situations but maxing them out is never a good idea. It will cause severe damage to your credit score, make them harder to pay off and trigger other problems that are best left avoided. Only use them if necessary.
Finding a Lender You Can Trust
In some cases, you may find it is impossible to raise the money you need without going to a lender. This situation can be hard to face because you have to admit you need help and reach out to someone who may control your financial future. Don't fret, though! There are many ways to find a lender who has your best needs in mind. Follow the steps below to get good results:
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Take the time to identify at least 5-10 potential lenders who you think you could work with as a person. Then, research their application and approval process and take the time to understand the unique factors that set them apart from others.
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As you talk with each of these lenders, you'll need to narrow them down to just a few that make the most sense for you. This process will require you to spend time talking with each of these professionals and figuring out which has your best needs in mind.
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Talk to a few lenders you may want to work with and start negotiating rates and other elements. Typically, you can get better rates and other benefits if you work with and not against your lender. However, this option may not be available for all companies, so be careful here.
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At this point, you should have a pretty good idea of what each lender can provide you. At this point, it is time just to take a step towards choosing a lender. Though it may be tough to take the plunge, doing so is better than waiting for too long and missing out.
Follow these simple steps, and this process should be much easier. What if you don't feel comfortable handling all of this process yourself? You wouldn't be alone. Many people discover that working with lenders in this way can be overpowering and troubling. It may also take up too much of your time and make life difficult. Thankfully, Goalry is here to help you manage this problem correctly.
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Working With Goalry to Get Help
If you're uncertain of what lender you want to work with, you should consider downloading our free app. Goalry lets you search through various lenders and narrow down your search based on your needs. You can create a profile, set up your financial information, and then search through available lenders by identifying their interest rates, willingness to work with people with your financial health, and more.
Find lenders who can give you a little bit of help and go through their application and approval process. Then, communicate with them through our app or elsewhere and get the money you need. You can find a lender willing to pay for your complete significant expense or a portion of it. Whatever your needs, it should be pretty simple to identify a lender using our app, especially if you take the time to do the complex research.
Goalry aims to help you reach your financial destination by connecting you with lenders who will work with you. While we are not a lender ourselves, we can connect you with the best and fairest lenders and make your payment process more straightforward.
Don't hesitate to reach out to us if you have any questions or don't understand any elements of our application or its operation.
Final Thoughts
As you can see, it is possible to plan for significant expenses on a limited budget and improve your life in many ways. However, it is crucial that you always take care of your necessities first, make sure they're paid off, and then move on to savings. Keep a little extra money for emergencies, as you never know when you might need it. You might be surprised at how little money you can live on comfortably while saving up for your significant purchase.