What You Need to Know About Successfully Managing A Financial Windfall
August 8, 2018
While some people certainly are successful when winning the lottery or receiving a large inheritance, the vast majority are unsure of how to manage these significant financial windfalls, and this can be very frustrating to realize that happily ever doesn’t just materialize. In many situations, sudden money can leave people worse off than they were prior to the windfall. Many people who are not used to managing such a large sum mismanage the funds. Many people blow through an inheritance or financial windfall extremely quickly, according to economists. It can seem like play money and this is where the risks can lurk for someone who is not familiar with how to handle a large amount.
The easiest step to managing a large financial windfall is to understand that it might be best for you to do nothing. It might seem like taking a luxury cruise, buying a new car or upgrading your current housing situation would be the first thing on your list to accomplish. However, this can lead to a number of different purchases in the same manner that will all leave you feeling regret.
Waiting at least six months after receiving a large financial windfall before making any life-changing decisions is strongly recommended. It’s also not a good time to consider quitting your job, at least not right away. Many people who have been in the unfortunate situation of struggling to manage a major financial windfall don’t realize that making these decisions so early on in their process could put them in line for a significant problem down the road.
If you quit your job too soon and then blow through the money, you’ll be right back out on the job market, now with all of the shame and guilt of having to explain what happened if your receipt of an inheritance was in any way public. Make sure that you also think about estate and tax planning concerns.
Scheduling a consultation directly with an estate planning attorney is one way to accomplish these goals and to verify that you have spoken to a professional about what to expect. When your life changes in a big way, you also need to have corresponding changes in your estate planning and related tools.
