Coming into money is not something that happens often but it does happen.
You could win the lottery, a wealthy aunt could pass away and leave you with a generous cash sum in inheritance, you could be recipient of a larger than expected work bonus or you earn some money from the sale of a company.
Before you commit yourself to spending, investing, giving gifts or even giving up your job, it makes sense to take some time to consider your financial situation and your options.
Paying off outstanding debts and bolstering the rainy day fund are among a number of ways in which people who unexpectedly come into money can utilise their windfall
Remember, long-term financial planning starts with knowing where you stand with your money. So here are some tips on making your windfall work for you in the long run.
Make a plan
The shock of a sudden windfall can set off a litany of irrational behaviours, such as giving all the money away, becoming a recluse, spending the money lavishly, or hiding or hoarding the money.
First, stop, take a deep breath and picture how you would like your life to look in five, ten, and maybe even 20 or 30 years. Where are you living? Are you retired? Travelling the world? Still working, but with less financial stress? Jot down your visions so you can keep that picture clear.
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Setting some goals drives your decisions about what to do with your windfall. With a direction in mind, you can plan more effectively.
Consider working with an expert; whether that’s a financial adviser, accountant or tax expert. You want the right type of professional for your situation. Depending on the size or complexity of your windfall, you may even need a team of experts.