10 Ways to Manage a Windfall

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Odds are that at some point or another, a big pile of money will land in your lap. And why is that a problem, you ask? Because most people have absolutely no idea what to do with it. They end up wasting it, squandering it or otherwise spending it within five years or less.

You are not most people.

You know that an inheritance, bonus, insurance settlement, the sale of a home or business – even a lottery jackpot (hey, it happens!) – comes with financial responsibility. A windfall isn’t monopoly money. It’s serious money that can be used to boost your savings and propel you towards your financial goals.

Here are ten ways to rope in that windfall and make the money last:

  1. First, see a tax professional and analyze the tax implications.
  2. Speak with a financial professional to help you decide the best way to invest.
  3. Put the money into a safe, liquid investment such as a money market fund, and breathe. You’ll need some time to wrap your head around the situation.
  4. Ask yourself: does this windfall change everything or just some things?
  5. Adjust your budget. 
  6. Consult with an estate-planning attorney to create or update your will and other necessary documents.
  7. Guard against those looking to share in your windfall, including everyone from get-rich-quick schemers to long-lost relatives, several times removed.
  8. Pay off high interest rate loans such as credit card balances.
  9. Buffer your emergency fund while you’re at it.
  10. Then, only after careful consideration, indulge in a little something that takes you to your happy place                                     

If you plan well and get a grip on your impulses, your good fortune could provide the groundwork for financial security for many years to come.