If you have recently received an unexpected sum of money, you may be unsure as to how to best handle your windfall. Though you want to use the money to help build a secure financial future, you also want to enjoy your new wealth. Check out these tips to learn how to deal with unexpected wealth.
1. See if the Money Comes with Any Terms and Conditions
Before you start spending your newfound wealth, it is important to see if the wealth comes with any terms and conditions. Wealth that comes from lottery payouts is a great example of money that comes with multiple terms and conditions.
For example, assume that you won a $30 million jackpot. Once you read the terms and conditions of the payout, you'll likely see that you do not receive $30 million in one lump sum. Instead, you may receive the money over a period of 20 or more years. If the payout does come with the option for a lump sum, you'll receive a significantly smaller sum of money.
If you inherit money that is in a trust, there are likely terms that dictate how much money you receive every year. Basically, take a few moments to learn how much money you are actually getting and over what length of time.
2. Think About Your Goals
Think about what your ultimate goals are for the money. Do you want to leave the workforce permanently, or do you wish to continue working part time? Do you want to travel the world? Do you want to ensure your children are taken care of? Are there charitable organizations that you want to support? You need to determine what you want the money to help you accomplish in your life.
3. Consult with a Financial Planner
Once you know your goals for your wealth, it is time to sit down with a financial planner. Your financial planner can help you with wealth management so that you can make all of your goals a reality. For example, if you want the security of knowing that you never, ever have to work again if you don't want to, your financial planner may suggest that you put a portion of your money in low risk holdings that pay a guaranteed amount of interest.
Assume that one of your goals is take care of your children after your death. Your financial planner can help you set up a trust so that your children are always provided for.
4. Forgo Any Immediate Big Ticket Purchases
It is best to avoid any large purchases until you determine your goals for your money. Though millions of dollars sounds like a huge sum, taxes alone significantly decrease the value. Get used to your new wealth and seek advice so that you do not make any regrettable spending decisions.