What to Do With a Windfall: 8 Tips for Handling Sudden Wealth
Life is typically a long process of trying to find enough money to scrape by. We dream of the lives of the lucky ones who made the grade, found wealth, and live luxuriously.
Sometimes, however, without any amount of work, a huge pile of money falls into our laps. Sometimes it’s the loss of a loved one, the winning of a jackpot, or the generous donation of an anonymous person. In any case, if you haven’t had money before and you have it all of the sudden, you’re going to want to make a plan.
Read the following to decide on what to do with a windfall.
What to Do With a Windfall
We’ve all heard stories of people who win the lottery one year and are broke the next. This is because they weren’t wise with the large amount of money that they had and spent it foolishly.
While some people ride out inheritances, there is a reason that most rich people have money– they know how to make it grow! Money can be difficult to keep when you don’t have much of it, but the funny thing about large amounts is that they just keep getting bigger if you play it right.
If you haven’t yet gotten your windfall, learn more here to get started.
1. Develop a Plan
Your first instinct might be to go out and buy a new car for you and all of your friends, but consider the long-term before you do anything drastic.
If you don’t have very much money in the first place, consider the reasons why you aren’t as financially set as you would like to be. There are always external factors that can prevent you from being successful financially, but there are typically some intrinsic ones too.
Do you spend frivolously only when you have money? Do you have excessive debts from credit cards or college? Do you plan for your future?
These are all some things to consider. Depending on the size of your windfall, you should create a financial plan that extends out as far as your money will last you. You may be sitting on a massive jackpot with millions of dollars. You may just be getting a fifty thousand dollar insurance payout.
With millions of dollars on your mind, you should consider hiring a financial planner. Who knows, maybe you could invest your money, accruing over fifty thousand dollars every year. If that were the case you could make an attempt to live well within your means without working for the rest of your life.
2. Consider Investing in Stocks
The stock markets, as most people know, tend to be volatile. By this, we mean that they are uncertain and often times very risky. If you want to continue to accrue wealth, however, you should certainly consider putting money into different investments.
Many investment options allow you to place money in a number of different, low-risk stocks that are almost guaranteed to grow at least 8 percent every year. That doesn’t sound huge at first, but if you are sitting on one million dollars in that investment, that will grow by 80 thousand dollars in the first year.
You can also consider drastically increasing your wealth by investing in riskier options. These are riskier for a reason, but the rewards can be incredibly huge. Only do this if you have enough money to invest in safe stocks as well, because the last thing you want to do is dwell on the fact that you lost the largest sum of money you’ve ever had.
Even if you’re someone who doesn’t value money, wants to live on the edge, and takes things as they come, you should still consider how you’re going to live throughout retirement. You don’t want to be worried about money for the rest of your life, and a windfall can allow you to begin saving for retirement at an early age. The main point is to set yourself up for the future.
3. Pay Off Your Debts
We aren’t talking slowly or gradually, we’re talking right now. If you have enough money to comfortably pay off the entirety of your debts, you should do so. Those fees or only going to keep accruing, and fast.
Credit card debts, student loans, personal loans, whatever. Make sure that any money that you owe to anyone or anything is paid back in full. This will show that you have your priorities straight and you are going to be responsible, even if you blow your money after that point.
4. Purchase Land or Real Estate
Investing in stocks is different from investing in real estate. Consider buying an old apartment building and having it renovated. You will be able to make tens of thousands of dollars each month from rent alone.
There is no shortage of options to purchase, refurbish, and sell in today’s age. Doing this, even if you hire out contractors to do all of the work, can yield massive profits. It may seem tedious or unnecessary to try to make your huge windfall bigger, but doing so will set you up for success later on.
5. Consider Your Loved Ones
So, you win the lottery. Visions of European getaways, weekends in Vegas, fine jewelry and big houses come to the forefront of your mind. All of those things are possible, but what about all of the people that you currently have in your life?
Sure, a life of luxury is possible for a little while, but all of the people that are currently in your life don’t have the same opportunity. They will be able to tag along for a few trips, but at the end of the day they will have to go back to their day jobs. They may not want to do all of the things that you want to do.
Think about your nephew who will one day need money for college. Think about your parents in their old age, probably requiring medical fees and money for retirement. What about your future children, wanting the best that the world has to offer?
A windfall, even though it’s in your own account, doesn’t have to be all about you. It should be about everyone else as well, and that is something you should consider deeply. Think of everyone that’s helped you over the years and think about their needs.
6. Give Back to the Community
This one is kind of an extension of the previous section. While it may hit less close to home for people, giving back to the community can be extremely rewarding for you and everyone around you.
Your nuclear family is probably the most important to you, but there are definitely hungry people living just around the corner. You may not have the knowledge or skill set to market and raise money for those in your community. The thing is, you don’t have to.
Most cities around the United States have a wealth of resources for those in need. The problem is that they typically don’t have adequate funding and are stretched bone-thin. These people are trained, compassionate, and dedicated to what they do.
You can do a whole lot of good by simply donating a fixed amount of money to those organizations that seek to uplift your community. They will do the work you wish them to do, and they’ll do it well.
7. Pursue Your Dreams
Let’s be honest, having a lot of money doesn’t necessarily make you happy. Even people with money are often torn about what they need to do to make their lives better. Things aren’t as fulfilling if you don’t work for them, and this is something that people with money might be able to tell you.
But you didn’t grow up with money. You grew up with dreams and aspirations that, if achieved, would satisfy you and make you extremely happy. Money would be nice, but you were banking on hard work and dedication.
Having money makes achieving those goals a lot easier. So, even if it means putting a lot of your windfall into a fund to start a business, doing so will be rewarding and challenging. If it works out, you’ve gotten that much closer to achieving your dreams.
8. Definitely Have a Lot of Fun
Who’s going to win millions of dollars and not to something to enjoy themselves? Financial planning is essential and should come before you even begin to plan vacations and exciting trips.
That being said, you have the opportunity to have a few once-in-a-lifetime experiences, and you should definitely do that. Wherever you have been dreaming of, go there. Whatever you wanted to experience your whole life, go experience it.
These trips and things don’t have to cost excessive amounts of money. Your real gift is the free time this money has allowed you. Plan frugally, and live out your dreams with a little bit of extra spending money.
Need Any Help Finding Your Dream?
You didn’t expect to have all this money thrown into your lap, so maybe you need a little help brainstorming what to do with a windfall! There’s no harm in getting a little help sometimes.
If you’re looking for any information on life-hacks, ways to improve your life, or just be entertained, we’ve got all the information you need.