If we are fortunate, we may be faced with an unexpected windfall once or twice throughout ur lives. A windfall is a sizable amount of money that comes to us, unexpectedly that one way or another, changes our lives forever. It could come to you as an inheritance. Maybe it comes from a lawsuit settlement. Perhaps you win the lottery or hit the jackpot playing online slots at Lottoland. Whatever it is, one day, you find yourself significantly more prosperous than you were the day before. It is fun to dream about what you would do. But, when it happens, it is not a dream. It is your reality. So, let’s look at it from that standpoint and think about the intelligent way to use your financial windfall.
Getting prepared
Payoff debts
Pay off everything you owe money on. You will be a lot more comfortable saving if you have plenty of room in your monthly budget from your income. Pay off your mortgage, car loans, personal loans, credit cards, student loans, and medical bills.
Set aside emergency funds
When we first get a large sum of money in our hands, we tend to think we will never need money again. But life has a way of changing. Calculate what it takes to provide for your life for a six-month period. Include food, living expenses, medical, clothing, fuel, and factor in the most expensive time of the year (prepare for winter heating expense). Deposit this money into an interest-paying account, and leave it. This is your emergency fund.
Keep things quiet
Do not announce your windfall to the world. You have enough to think about without every person who ever passed you in the hall in school coming to you with their great idea (that needs financing). Don’t make a lot of changes immediately. Consider taking a leave of absence so you can clear your head.
Note: Do not keep the money with you or in your home. Make a habit of saying, “I don’t have it yet.” Keep it in the bank. This is for your safety.
Make a list
What are the things that you want to accomplish with your money? Make a list. It may look something like this:
- Prepare for the kid’s education
- Retirement fund
- Open boutique in London
- Buy a vacation home in Greek Islands
- Charity to help Grace Chapel Holy Communion Church
Once you have a general idea (i.e., a list) it is time to contact a professional financial advisor to assist you with preparing your money and recommending investments in ways that will allow you to see the dreams you have become realities.
Photo credit: August de Richelieu
Hire Financial Experts
When you are dealing with a lot of money, there is not just one person you need to consult. There are many people. You will need to look around. Check their references and meet with them. If someone gives you a bad gut feeling, go with that feeling. If they check out well, but your personalities clash, it may be wise to avoid them as well. This is your money. They are there to advise you and carry out your wishes to the best of their ability. They may or may not agree with you, but it should never be a conflict between you. You need to do a bit of research and be sure your money is in a rock-solid bank. With so many online banks popping up, be sure you have an established banking service. You will also need the services of:
- Financial advisors
- Experienced in short and long term investment strategies
- Attornies
- Tax specialist
- Business advisors
- Real estate specialist
More specialists will be added to the list as your investments and plans develop.
Timing
In the beginning, you will need to establish your plan with your partner, banker, financial advisor, and attorney. You will need to have a strategy worked out for when you want each step of your plan carried out and by whom. You will have to consider what your lifestyle will be. Are you going to move to London and run your boutique, or will you hire someone to run it while you oversee it from your current location? Are you going to invest a monthly amount into your children’s education account or make a large deposit now and let it accumulate interest? With the money that is left over, will you travel to other countries or maintain your current lifestyle, only living it free of debt? These decisions and others will dictate how you will live your life and how much your windfall will change your circumstances. These are choices we all wish we had to make. One thing is for certain; if you make the right choices, you will have the freedom to enjoy your life in ways that few of us ever do. So, think it over carefully, then choose wisely.
