Receiving a large, unexpected sum of money can be a wonderful surprise. Depending on where the money has come from, it can also be associated with feelings of guilt, fear and conflict. Whether the money is from an inheritance, a divorce settlement or the lottery, a financial windfall can be a life-changing experience. More
magazine's Jennifer Braunschweiger talks with Jean about how sudden wealth can change your life. She also shares her tips on how to manage a financial windfall:
- Underestimate how much you will get. Many people aren't sure how to handle money they aren't used to and can go through it quickly because they don't know how to budget it. Come up with what you think is a conservative number of how much you expect to have coming in each month, and then cut that number in half and put it into savings, Jennifer says.
- Wait it out. It's an emotionally complicated time when you fall into a large sum of money so quickly, Jennifer says. But she warns not to act on it immediately. "The time to be making decisions about how to spend this half a million dollars is not right after getting it," she says. "The best thing to do at first is sit tight."
- Keep working. Continuing to work will keep you connected to your life and to financial reality, Jennifer says. It also buys you the time to sort out some of the emotional complications and priorities associated with the windfall. If you continue to work, you are not forced to act immediately—you can take time to make some well-planned decisions about what to do with your money.
- Research and hire a financial planner. There isn't one set answer for what to do with the money, so you need to make sure you are working with someone who you trust, who is in sync with your goals and who isn't pushing you to make decisions you don't understand or aren't fully comfortable with. "The important thing to do is find a planner who can give you some good advice," Jennifer says. "How you spend the money is going to become dependant on what your priorities are."