Hoping to Win the Lottery? Steps to Remember If You Receive a Windfall
When you receive a windfall from an inheritance, the lottery, or a kind gift, it’s easy to come unraveled and make some truly horrible decision. Many former NFL stars and lottery winners have nothing to show for their big money jackpots.
Taking advantage of an opportunity such as this can set you up for financial independence or early retirement. The last thing you want is to squander it all and have nothing to show but regret. By following some of these pointers, you can hopefully find ways to make your windfall work for you in order to provide the most value.
Don’t Make any Lifestyle Changes for a Year
The first thing that the average person does when coming into a large sum of money is to go on a spending spree. Instead, invest the money in a savings account. Not only does this save you from making poor purchases but it allows for you to plan for things such as taxes on this money. Depending on the source of your windfall, you may pay taxes on the sum or on interest earned once the money is invested.
Pay Down High Interest Debt
Before spending any windfall money, priority number one should be to first pay back what you have borrowed, especially high interest debt. Doing so will not only benefit your credit score but it will relieve you of the burden of being in debt and save you thousands of dollars potentially in interest.
Seek Out Expert Advice
Seeking the advice of a financial expert is definitely advised. If you don’t already have one it is in your best interest to do some careful shopping around and find someone who comes highly recommended. A financial advisor will also help you create a plan based on your long term goals and hopefully advise on how to make it grow so it doesn’t fall victim to inflation. Not only will they assist in a plan for retirement but will help you formulate several plans based on your goals.
Ask if the advisor is a Certified Financial Planner. While this doesn’t ensure that they’ll be the right fit for you, it will help weed out some potentially negligent candidates. Also, check the FINRA website BrokerCheck tool to see if your future advisor has had trouble with the law. It might just be that what you’re being told isn’t entirely the whole story. This site will help you find out.
Finally, enjoy yourself if only a little with any windfall you may come into. This always comes after you’ve already done the responsible things such as paying off debt and formulating a plan for investing the majority of it. Don’t fall into the trap of blowing all of your money. If you’re good to your cash, it’ll serve you well for years to come.
Coming across a windfall does not have to be a stressful occurrence. With careful planning and a thoughtful needs analysis, it can set you up for financial success. At the end of the day you should settle on a course that not only feels good now, but that also will return to you the greatest amount of value.
Photo: Montage Communications