If you’ve recently received a sudden windfall of cash, either from an inheritance, winning the lottery or some other event, you may be wondering what to do with all that money. A sudden impulse is, of course, to go out and spend it, purchasing items for the home or going on a nice vacation. But without a solid plan, it can be all too easy to quickly spend more than you meant to, and before you know it, all the money could be gone.
Consider these smart things to do with a sudden windfall before engaging in any action with the money — you’ll be glad you did.
Suddenly coming into a lot of cash can be very exciting, and you may be tempted to let everyone you know about it. But this can open the door to a lot of unwanted attention. Suddenly friends and family that you haven’t talked to in years may be knocking on your door or calling your phone. Tell only the people that need to know and you’ll be much the happier for it.
Depending on the situation, you may need to pay taxes on the money you’ve received. Determine how much that is and set it aside, not to be touched. This way you’ll be sure to have it come tax time.
Take about 10 percent of the windfall and use it for your enjoyment. This ensures that you get to enjoy some of the money without accidentally spending much more than you meant to.
With or without the aid of a financial planner, you should develop a plan for the rest of the money. Consider both short- and long-term goals such as paying off debts and planning for retirement. A financial plan will help you better manage all your money responsibly.
There are many things you may wish to do with a portion of the money. Consider these options when you are working to determine your goals and developing your financial plan.
With a bit of patience and planning, you are far more likely to enjoy your money along with peace of mind and happiness, going from rags to riches rather than going from riches to rags like many others have done.
Advertising Disclaimer: Simple. Thrifty. Living. does receive compensation for some of the services that we recommend, although we only recommend services that we truly believe are the best.