15 Simple Tips for Planning Major Expenses Without Anxiety
Spending money doesn't need to be stressful. Many times, people get anxious about upcoming expenses and worry that they won't be able to afford them. Still, with a proper plan, you can cover your purchases stress-free.
For 65% of Americans, finances are their biggest source of stress. If you're planning to invest in a home, plan a wedding, or finance your child through college, you need to have a clear plan of action to help you manage your money without anxiety.
Preparing for large purchases can be challenging, but we want to help make it easier. We aren't going to suggest giving up coffee or selling your valuables to finance your purchases. This list only includes practical tips and advice to help you prepare for major expenses without saddling you with any additional stress.
1. Plan Ahead

Don't wait until the last minute to begin planning for a large expense. Unless you're dealing with an unexpected expense or emergency, you should give yourself ample time to plan and budget for major purchases.
Poor financial planning will impact your life for several years. According to Bankrate, 74% of Americans have financial regrets. Carve out some time, either at the beginning of the year or every six months, to plan for large expenses.
2. Calculate the True Cost

Most people assume that the total cost of the product only includes the amount on the price tag. But the truth is, many purchases come with additional charges that must be considered.
Before you make any major purchase, first calculate the actual cost of the item. For example, if you're purchasing a car, you must factor in the cost of insurance, repairs, fuel, and maintenance. So, what's the true cost of your expense?
3. Compare Pricing

A major purchase is a major sacrifice, and you want to be confident you're making the right choice. If you're buying a new car, you won't settle for the very first one you find, and neither would you choose the first available venue for your wedding.
Regardless of what you're purchasing, always evaluate the cost, additional fees, the vendor, etc., and compare them to other similar companies and services. Comparing options ensures you get the best value for your money before making a major purchase.
4. Give Yourself a Timeline

Once you've determined the full cost of your purchase, you need to decide on a timeline. You need to set a clear and realistic timeline for when you need to have the funds ready. The more time you allow yourself to save up for a big purchase, the less aggressive your savings strategy will need to be.
If you need $10,000 a year, you'd need to set aside about $834 a month to reach your goal. Having a set deadline in mind will motivate and encourage you to be consistent with your savings.
5. Develop a Funding Plan

Finding the money to pay for major expenses can be a significant source of stress for most people. According to Bankrate, most people can't afford a $1,000 expense with their current savings. However, with a solid savings plan, you can set aside the money you need without any worry.
So, how do you plan to fund your big purchase? Do you plan to take a loan? Are you going to refinance your home? Will you set aside a lump sum each month? Review your finances and consult a financial advisor to determine the best funding strategy for your financial situation.
6. Expect the Unexpected

Life is unpredictable. When planning for a major purchase, what do you do if an expensive, unexpected issue arises? You need to include a buffer in your budget for a major expense.
For example, if you're buying a home, there could be additional finishing touches you hadn't initially factored into the cost that need to be taken care of. If you purchase a vehicle, you might have a few small personalizations you want to make, or if it's used, you might want to have it detailed. Always set aside additional funding for contingencies when planning for a major purchase.
7. Open a Specialized Savings Account

Where are you saving your money? When planning for a large expense, it's easier and more effective to set up a separate account. A separate account makes it easier to track how much you've saved, making it more likely that you'll reach your financial goal within the estimated timeframe.
A general savings account increases the likelihood that you'll dip into your savings fund when you need additional income. Always set up a specialized savings account for your major expenses.
8. Focus on Cutting Expenses

When planning for a large purchase, every additional dollar counts. Evaluate your expenses and find ways to cut back on your spending. The average person spends the most money on housing and food. How can you reduce these expenses?
Could you refinance your mortgage? Move to a cheaper apartment? Make substitutions in your groceries or avoid food delivery services? Look closely at these expenses to determine where you can save.
9. Consider an Additional Income Source

If you have a major expense on the horizon, you need to be resourceful. While cutting back on expenses and budgeting can help with growing your savings, bringing in additional income is a guaranteed way to achieve your goal much faster.
You might need to work overtime, pick up additional shifts at work, or find a second job. According to Bankrate, 36% of adults earn extra money through a side hustle. You could also consider working as a freelancer or starting a side hustle in your free time.
10. Review Your Budget

What are your typical monthly expenses? How much are you saving monthly? How much are you willing to save toward your upcoming expenses? Before you spend any money, you need to update your budget.
Review your current budget to determine how this expense will affect your daily life. You'll need to reallocate funds, change your spending habits, increase your savings, etc. Reviewing and updating your budget will help you reach your savings goal.
11. Check Your Insurance Coverage

Sometimes, major expenses arise because of unexpected or unavoidable events. For example, if you've had an accident and need a new car or you need to repair your roof because of weather damage, planning for these situations is impossible.
In these situations, contact your insurance provider to determine if your plan covers any or all costs.
12. Avoid Tapping Into Your Emergency Fund

With a large expense on the horizon, you might be tempted to dip into your emergency fund. However, your emergency fund should never be used for planned expenses. The money set aside in your emergency fund should cover your living expenses if you lose your job, have a medical emergency, or any other unforeseen expense.
If you plan to take on a large expense, avoid tapping into your emergency fund. You never know when an emergency will arise. Keep your emergency fund intact to protect you from any additional financial burden.
13. Don't Put It On Your Credit Card

Using your credit card for a major expense could be a threat to your finances in the long term. According to Bankrate, 60% of Americans have had credit card debt for at least a year.
Interest rates on credit cards are notoriously high. Before taking on unnecessary debt, ensure you've weighed your options and are making the best decision.
14. Don't Forget Your Long-Term Goals

It's easy to get caught up in planning and saving up for something major like an international vacation, wedding, or buying a new home. However, you should never lose sight of your long-term financial goals, like planning for retirement or your children's college fund, while planning for a big expense. Don't dip into your specialized savings or sacrifice your financial health for large purchases.
According to an AARP survey, 61% of adults over fifty are worried they won't have enough money to survive during retirement. Make sure planning for your short-term expenses doesn't jeopardize your long-term plans.
15. Don't Neglect Your Mental Health

52% of Americans reported that money has negatively impacted their mental health, according to a Bankrate survey. While proper financial planning can help ease your worries, you still need to prioritize your mental health.
A major expense often requires sacrifice and changes to your lifestyle, but that shouldn't include your mental health. Separating your emotions from your money can be difficult. But by incorporating ways to improve your mental health and regularly checking in with yourself, you can ensure stress and anxiety don't get the best of you.