Francisco J. Faraco’s Guide to Managing Large Expenses

A former employee at Morgan Stanley, Francisco Faraco, believes planning a monthly budget without a financial cushion is two-dimensional. In his experience, no matter how well someone who lives paycheck to paycheck plans their month, a single large expense can ruin all their well-laid plans to rest.

Keep reading to take the CFA Charterholder’s approach to managing large expenses.

Start Anticipating (And Saving!)

Take a long-sighted approach to draft your monthly. Anticipate the larger long-term expenses like college tuition, security deposits, down payment on a new vehicle, etc., before they come, and start saving up every month. Find a credible financial advisor or firm on FINRA BrokerCheck and work with them to grow those savings into nest eggs for these larger expenses.

You can also make a list of expenses with payment deadlines. If the deadline is too close for comfort, consider pushing it back. For instance, you can always differ some college courses to save up.

Do the Math

Another way to save for a larger expense is to calculate how much you need and divide it by 12. Doing so lets you know exactly how much you need to save every month, and you can start planning for it in your budget.

If the large expense(s) is fairly important, Faraco suggests writing it down in your budget alongside your regular expenses like utilities, rent, student loans, car installments, etc. You can be more flexible with your savings if it’s a nonessential expense(s).

Image Filename: monthly-budget

Image Alt Text: A Book of Table for Monthly Budgets Beside a Bowl of Paperclips and a Pen

Get Another Job

Approximately 13 million working Americans work two jobs to make ends meet, pay off their student loans, and save for the future. You can get another job to meet an upcoming expense without letting it affect your monthly budget.

Before considering employment opportunities, know how much you’ll need to earn and how long. Write down the estimated hours you’ll need to put into your second job and start searching for job openings that accommodate your schedule.

Put Away the Savings

Francisco J. Faraco recommends putting away the extra money somewhere you won’t be tempted to spend it. This could be a savings account or in the form of an unliquidated asset. Find the right place to cultivate and grow your savings by finding a credible advisor on FINRA BrokerCheck.

As someone who’s been in several leadership positions, Francisco Jose Faraco knows what he’s talking about. A CFA Charterholder and Teaching Assistant in the Financial Mathematics program at the University of Chicago, he’s imparted career advice to several graduate-level students who have gone on to become licensed advisors with their own FINRA Brokercheck Francisco Faraco profiles.

Disclaimer: This article’s content is solely for informational purposes and is not written to be taken as tax, legal, financial, or investment advice. The author of this article does not evoke a recommendation, solicitation, offer, or endorsement through its content, for the sale or purchase of financial securities in the United States of America or any other jurisdiction. The article’s content presents general information without addressing any individual’s circumstances. The article is not written to incorporate all relevant matters discussed or the relating law. You assume the responsibility of appraising the facts and merits when using the information presented in the article. The author is not liable for any damages claimed from any action you perform based on the information presented in the article.

Related Articles

Back to top button