Your Financial Windfall: A Step-By-Step Management Guide
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Most of us dream of the day when we might receive a financial windfall. We think how wonderful it will be; how freeing; how we could pay off all our debts and focus on the future without money being a concern.
Then it happens… and you realize that, actually, dealing with a windfall is incredibly stressful.
Okay, so it’s a good type of stress. It’s the type of stress that comes from concern about making the right decision, rather than the stress that entails worrying about whether you earn enough to put food on the table. However, there’s no doubt that receiving a large windfall of money can present you with a whole list of new problems to concern yourself with.
If you find yourself on the verge of receiving — or have already received — a large sum of money, you’re probably wondering what on earth you should do next. Here are a few ideas that can help to point you in the right direction.
Step One: Settle Your Debts
If you have any debts, then make paying these debts off your first priority. There’s little point in saving a large amount of money if you still have debts that you’re paying interest on. While it might feel like you’re “wasting” the money by paying off debts, you’re actually saving yourself a small fortune in the future.
Whether or not you want to include your mortgage as one of these debts is a personal choice. It also depends on the size of the amount that you have inherited. However, do bear in mind that many mortgage providers charge penalties for early repayments, so this is definitely a step you need to research thoroughly.
Step Two: Consult A Professional About Investments
It’s nice to have money now, but you’re going to want to continue to have money in the future. Investments are the way of ensuring that windfall can to continue to benefit you.
If you have never dabbled with investments before, then you’re definitely going to want to seek the help of qualified financial advisors to point you in the right direction. There is such a thing as bad investments, which you are more liable to fall prey to if you try to DIY this step. Consult a pro and ensure that any investment you make keeps your money in safe hands.
Step Three: Arrange Savings
Investments are a good use of money, but savings are also important– ideally, you want a division of both to ensure that you’re making use of the cash you have. You will often find the best interest return on savings accounts that lock money away so you can’t access the funds for a set period of time. If you’re confident that you’re not going to need the money in the short-term, this might be the best choice for you.
Step Four: Enjoy Yourself
You’ve experienced a financial windfall; enjoy it! Of course, you should take all the steps above, but a little treat — such as finally going on your dream holiday — won’t do any harm, so enjoy your good fortune and take the opportunity to treat yourself. Anything else and you will probably feel like you’ve sold yourself short– so have a little fun and then make the sensible decisions your financial future is relying on.