When it comes to financing major life expenses, not everyone has money ready to spend. Some people save money on every paycheck, while others can barely manage costs. So, what should you do if there is a medical emergency or you need to pay off your debt without emptying your bank account? If you are here to learn exactly how to do that, we have you covered.
In this article below, we will explore three ways you can easily finance major life expenses without going broke. So, to learn more details, keep on reading.
Budget and Plan Ahead
One smart way to save money and finance major life expenses without going broke is to create a budget. Every financial plan starts with a set budget and factoring in every dollar you have. This includes assessing your income and expenses. Whether you have a fixed income or it varies from month to month, creating a budget will help you stay organized. The best way to do so is to figure out your after-tax income, which is the net income from your paycheck that you take home after state and federal taxes.
Once you have the paycheck, it is recommended that you follow a 50/30/20 budgeting approach. This system includes 50% of your after-tax income to cover your needs, such as utility bills, groceries, and other fixed expenses. The 30% of your income will be allotted to your wants, which could be shopping and going out. However, the last 20% strictly goes to your emergency fund, which you will eventually use to finance major life expenses.
Explore Financing Options
If you do not have savings or emergency funds, there are still a few practical ways to finance significant expenses. For instance, you can explore different financing options, such as applying for a personal loan, borrowing money from friends and family, or tapping into your home equity for cash. Borrowing money from family and friends is the best way to face any financial challenges, as your loved ones are always there to support you.
However, for some reason, you couldn’t get that help, and borrowing against the equity in your property is the best option. With HELOC (home equity line of credit) by Amerisave, you can finance significant life expenses such as medical bills, starting a business, education costs, and more. The best thing about applying for HELOC is that you can borrow money that you need instead of getting a lump sum amount in traditional loans. Plus, you only pay interest on the amount you have borrowed.
Side Hustles and Extra Income
One of the best ways to ensure you always have money on hand is to diversify your income with side hustles. Having an extra income that you can set aside every month without worrying about meeting monthly expenses will help you fund any financial emergency you may face. Whether you want to pay off your debt or start a new business, side hustles will pay for your major life expenses. If you dont know where to start, begin by exploring freelance work and offering services. Or you can monetize your hobby to start generating passive income. Whatever you choose, make sure it generates consistent income in the long run that you can rely on.
