For most of your life, money doesn’t just arrive out of the blue. You have to work hard for it, toiling day after day to achieve the lifestyle you want. But sometimes, something goes your way, and all of a sudden, you wind up with a massive lump of cash in your bank account.
Here are some of the reasons why this might happen:
- You bought a lottery ticket or scratchcard and got the winning numbers
- You placed a bet on something with long odds and won
- You went to a personal injury law firm and won your compensation claim
- You inherited money from a family member who died
- You received a gift from somebody who appreciates you (such as a large tip)
Getting a windfall, however, opens up a whole new set of challenges. How do you make the best use of your newfound wealth? Let’s take a look at some of the dos and don’ts for what to do next.
Do Pay Off Your Debts
Debt is a massive drain on your wealth. Not only do you have to pay back the principal, but you also have to accommodate all those pesky interest payments too. It massively eats into your financial health.
The first thing you should do with a windfall, therefore, is clear your debts, starting with the most expensive. Credit cards and personal loans tend to be the most costly, followed by car loans, overdrafts, and mortgages.
Don’t Blow It All Immediately
You’ll hear a lot of people who say things like, “there’s no point having money unless you’re willing to spend it.” But smart people know that the more money you have tied up in investments, the more money you can make long-term. Money begets money in the form of interest, so spending your windfall now could mean that you deny yourself a high quality of life in the future.
Your best bet is to continue your life as usual and place your windfall in investments if it isn’t a life-changing sum of money. If it’s millions of dollars – well, you have freedom, don’t you!
Do Take 10 Percent And Do What You Like With It
Of course, when you receive a windfall, you can celebrate a little bit. A lot of people who find themselves in this situatoon allow themselves 10 percent of the cash to spend how they like and leave 90 percent to go towards bills, retirements, paying off debts and savings.
Don’t Tell Everyone What’s Happened
If you receive a massive windfall, don’t immediately tell everyone what has happened. Instead, be discreet about your newfound wealth. You don’t want to attract conflict or begging.
Do Open An Investment Account
When you receive a large sum of money, the last thing you want is for it to sit in a bank account, doing nothing. Open an investment account and plop the money in there to earn a steady return. If you’re not sure how to do this, ask a stock broking agency.