Inheritance. Lottery. Huge casino winnings. Some people get the chance of a huge financial windfall, but, almost 70%, instead of saving money, will squander it.
How can someone miss the HUGE opportunity of getting set for life? How can someone lose all this money recklessly and then get back to square one?
Find out how you can properly manage a big windfall and make the most of your money.
1. Keep the leeches away from your money
Leeches are those people (we all know them), who instantly seem to remember you, as soon as you came into money. Distant relatives, old friends you stopped keeping in touch.
You don’t owe them a chunk of your money, so try to be as discreet as possible. If they still find out about your amazing luck, make sure to let them know that their kids’ college funds, their medical bills and their mortgages (or whatever ‘needs‘ they’d like you to solve) are their problems and not yours.
Unless you clearly plan to set a portion for charity (donations or helping some of them), the money is YOURS to use it.
Just try to remember how many of said friends came to you with ‘gifts‘, when they had something great happen in their lives. Not too many … right?
2. Get out of debt if possible
Debt – this is the biggest problem for many people nowadays and probably the best one to get solved, now that you have some funds available.
Use at least a part of your money (or entirely, if the windfall is not that huge) to pay off debt. Even if the money can’t cover it all, it will set you WAY ahead in your debt payment journey.
It’s a pity to squander your fortune and still owe money, when your financial windfall can help so much with clearing debt.
3. Solve any other problem that cannot wait
Say a medical situation that really needs your attention. Or a purchase that would help your family tremendously. Nope, a huge TV screen is not such thing 🙂
Kidding aside, if there is something you do need to pay for, it’s a good moment to let your financial windfall work for you. I’d probably pay for some medical issues I’d like resolved and also purchase a home in an area that we’ve been dreaming for years to move in.
4. Set yourself for retirement
You might not want to quit working entirely (many of us are running nice relaxing businesses and wouldn’t consider retiring completely for many years to come). But you need to think about saving money for retirement.
Even if there’s not a lot of money to be saved, anything matters and helps. In my case, I’d be interested in saving money for our ‘golden’ years, even if at least one of us will continue to be involved in various side-hustles.
I am a workaholic after all and, even if I can spend 2-3 days away from my web design ’empire’, afterwards I feel the need to do some work.
Anyway, no matter what happens in the future, at this moment, you’ll have less worries than before, with debt being paid off, big problems taken care of and your retirement looking better by the day.
4. Make your money work for itself
You might be employed and hate your job. Or love it. Or you’re running your own small / bigger business.
My next move would be to make sure that my fortune grows. I can’t imagine just spending my money left and right and not trying to do anything that would earn me money in the future.
Maybe you’ll start an easy to handle business, that will earn you revenue. Maybe you’ll invest wisely some of the money. Learn as much as you can about finances, hire the right people to show you the ropes and take it to the next level. This step can really make the difference for you and your family.
5. Indulge a little
Saving money after a windfall is pretty difficult, because most of us lack the discipline. And, even if we do have it, just doing the ‘right’ thing gets boring.
So, you’ll need to also let go and learn how to relax.
And this is where you can make a difference: by indulging in a responsible manner (set aside 3-5% of the money for instance), or squander it all.
At this stage you can make a purchase or go to a trip, just because you need to celebrate. Once you have your future so well planned for and the money wisely saved/invested, splurging a little won’t harm you.
Have you come into any unexpected money? What was your plan to make your money work for you?