Sometimes, life grants sudden windfalls. One would assume a windfall would help relieve financial stress, but often they can lead to a different kind of stress. Big decisions need to be made regarding what to do with a financial boon, and making those decisions can come with its own complications. Some windfalls may come with complicated emotions if it comes from the loss of a loved one or a relationship dissolution. Read on for helpful tips to handle a windfall with wisdom
Take A Break
Don’t make hasty decisions. Give yourself some breathing room and put the money aside while dealing with any emotions tied to the money. Decisions don’t need to be, nor should they be made in an emotionally heightened state. There’s no set time limit to wait, but waiting at least a few months isn’t bad advice. Keep living within your means and avoid excess until you get your financial house in order.
Keep The Money Safe
Depending on where your windfall is coming from, you may be able to keep the money in the account it’s already in, like with a life insurance benefit. You can set up a savings account to hold your funds while you make decisions.
Meet With A Tax Professional
Consult a professional about taxes pertaining to your windfall. Life insurance benefits are generally tax-free, but other windfalls may require payment of taxes to the government.
Get A Financial Advisor
Depending on the size of your windfall, you will want to meet with someone who can help guide you in the best ways to manage or invest your money.
Before you start spending on the wants, make sure your needs are met. If you’ve struggled to save for retirement, think about investing in an IRA-Roth fund to secure you’re future. Pay off debts, create a cushy emergency fund.
Buy a few of your wants. There is no need to blow your windfall all at once. If you invest well, you can live off the interest alone as your wealth accumulates. But make sure you splurge a little and enjoy it. Set an amount you are willing to spend and stick to that budgeted amount.