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Using Crowdfunding As Part Of A Comprehensive Personal Finance Strategy

Personal_Finance / Money Making Mar 29, 2016 - 09:18 AM GMT

By: Larissa_James


Crowdfunding is being used for everything these days, from launching promising startups to affording education. As you chart out your personal financial goals and the plan that you need to achieve them, you may find yourself wondering about the possibilities for crowdfunding to help you in your own life. This is especially true if you’re struggling with debt or if you can’t seem to get solid footing for yourself when it comes to paying your bills.

In some cases, crowdfunding is the right way to go, but you have to know what you’re doing; otherwise, you’ll earn zero donations, and you might damage your reputation in the process.

Know When It’s Right

There’s almost no objectively “wrong” way to ask for money via crowdfunding, but there’s some social etiquette to follow if you want to be respectful and to maximize your chances of success. For starters – and this should be obvious – only make a crowdfunding campaign if you truly need the money. This isn’t a way to generate passive income; it’s a way to help you get back on your feet. If you’re dealing with a genuine financial disaster, and you can’t afford to pay your bills or put food on the table, this is the time to ask for help.

You may also decide to crowdfund during a particularly exciting or momentous time in your life. For example, Plumfund suggests using their funding platform as a means of allowing baby shower attendants to pool their resources for bigger-ticket items.

Choose the Right Platform

Next, you’ll want to make sure that you’ve chosen the right platform for your crowdfunding efforts. Some platforms, like Kickstarter, have specific regulations that forbid any non-compliant posters from making their campaigns live. Most, like Indiegogo, will skim a little off the top to compensate them for use of the platform. Every platform has different demographics and different community expectations. Do your research in advance, and know what you’re getting into before you jump in blind.

Have a Measurable, Attainable Goal

You can’t just start a campaign asking for “money” or generic “donations.” You need to know exactly how much money you need. This goal should be both measurable and attainable. For example, if you’re trying to gather money for an important home repair that you can’t put off, show that you’ve already gathered several estimates; this makes your goal measurable. Then, make sure that your goal is realistic; if it’s too much money, people won’t donate. Consider asking for a fraction of the costs if it’s more than you can realistically hope to achieve.

Have an Action Plan

Develop an action plan for how, and when, you’re going to spend the money. This will convince the people in your life that you’ve thought this through and that their donations will make a positive impact, helping you to get more donations and to make a better impression at the same time. Even more importantly, it’ll give you a blueprint that you can use for your future. For example, if you’re trying to “start over,” you might explain that you’ll use the money as a down payment for a new apartment and to pay for a portion of your moving costs, then outline a plan for how you’re going to get a new job closer to your area of expertise and grow from there.

Express Humility and Gratitude

Crowdfunding campaigns give you ample opportunities to communicate with your audience: you can add more content to your campaign, post about your campaign on social media, and even talk about your campaign to friends and family in person. When you’re doing this, express as much humility and gratitude as you can. Show that you’re asking for these donations out of necessity, not out of greed or laziness. Show that you understand that anybody who donates is truly making a sacrifice, and express your appreciation for those who have already donated.

Show Thanks

Your donors have made sacrifices to support you. You owe them thanks. After your campaign is over, show your appreciation for the support that everyone has given you, and do something special for them. This may be as simple as writing out a handwritten note to everyone who participated in your campaign, or it could be something more extravagant, like throwing a party when you finally do get back on your feet.

Pay It Forward

You’re doing this because you’re going through a challenging time, and you’re relying on other people who are more established to be there for you. Hopefully, with this aid, you’ll become more established in your own right, and you’ll be in the position to help someone else who’s fallen on challenging times. When you do come to that position, you owe it to them (and to yourself), to pay your good fortune forward and to help them out in their campaigns. Otherwise, the system isn’t going to work. Personal crowdfunding is a delicate balancing act of relationships and finances, so if you truly believe in the system, you have to be there on both sides.

Copyright © 2016 Larissa James - All Rights Reserved Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.

© 2005-2016 - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.

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