A windfall, meaning coming into a large amount of money, is something we all dream of. In reality, windfalls do happen, perhaps from a lottery win, a smart investment, or an inheritance. While a windfall is a positive thing, there are many considerations to be made. Receiving a large sum of money can be overwhelming and many people aren’t educated in financial management and can end up mismanaging their new wealth.
While many of our first instincts would be to spend, perhaps indulging in purchases we’ve always fantasized about like a boat or a fancy car, you should be careful not to let these instincts take over. If you manage your money properly, there will be more than enough to buy the things you want. First, it’s important to make a financial plan.Here are some steps you can take to make sure your new wealth lasts for a long time, and even grows.
- Open a High-Interest Savings Account: The first thing you should do is store your money in a high-interest savings account, which will keep your cash safe and allow it to grow a bit.
- Consult an Expert: Very few of us are finance experts, so it helps to consult one. They can help you create a financial plan unique to you and your interests, plus they will have the insider knowledge to help you maximize your funds.
- Clear Your Debts: While it is tempting to go on a spending spree, make sure you pay off any money owing before you do so. It doesn’t seem like much fun, but if you neglect debt it only grows, losing you more money.
- Think About It: Receiving a large chunk of money at once can make you feel like you’ll never run out, leading to impulsive spending. Over-spending has caused even billionaires to go broke. Sure, you’ll want to quit your day job right away and spend to your heart’s desire, but the smart choice would be to stay put for a while, recover from the excitement, consult with experts and think about what you really want to do with this money.
- Enjoy It: Though we encourage cool-headedness, it’s not realistic to think none of the money will be spent on fun things. Consider taking a percentage of the money and dedicating it to enjoyment–perhaps a vacation, or an indulgent purchase you’ve dreamed of. By using a specific amount for this, you can still feel rewarded within reason.
We’ll keep on dreaming of windfalls, but for those for whom it becomes a reality, do yourself a favour and make a plan.