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It’s not uncommon for people to fantasize about suddenly receiving a large sum of money, whether it’s inheriting a fortune from a distant relative, winning the lottery, or having an investment far surpass expectations. While a sudden financial windfall can change your life for the better, it can also create stress and cause you to undermine your own success. According to CNBC, lottery winners are more likely to declare bankruptcy within three to five years than the average American. To ensure your sudden wealth changes your life for the better, follow these tips:
Keep It Quiet
One of the most important things you should do when experiencing sudden wealth is keep it quiet. Don’t instantly tell your friends or family, and definitely don’t tweet about it. Unfortunately, your good fortune can attract many money-seeking individuals who would like you to share the wealth. While helping people may make you feel good, the pressure from friends, family, businesses, and charities can become both overwhelming and detrimental to your budget.
Hire a Financial Advisor
Sudden wealth is often much more complicated than it appears. Depending on how you received the influx of money, you may have to pay taxes or fees, and making poor fiscal decisions can deplete your account balance very quickly. A qualified financial advisor can help you make sensible investments, put together a spending plan to ensure your money lasts, and act as a buffer between you and the many people asking for a piece of the pie. It’s important that you take the time and research potential advisors before you hire anyone. Look into their background, fees, and references, and thoroughly review any paperwork when vetting candidates. The U.S Securities and Exchange Commission has a number of resources where you can sufficiently conduct your research, or stop at your local credit union for assistance.
Set Goals
Once you know how much money you truly have after any taxes or fees, you should think about what you want to do with it. Think about your wants and needs, and consider both your short-term and long-term goals. Despite sudden financial gains, money is not infinite. Saving for a child’s college tuition, going on vacation, or purchasing a home will still require planning and sacrifices. Having goals can keep you on track with your finances, as working and progressing towards them leaves less opportunities for frivolous and unplanned spending.
Take Your Time
It can be easy to get carried away with spending when you suddenly have more money than ever before. Don’t rush into any decisions about how you’ll spend your wealth and avoid making any promises to anyone. If possible, spend the first few weeks, or even months, as if your sudden wealth didn’t exist. This will give you more time to both process the situation and make calculated decisions that will allow you to make the most of your newfound wealth.
Utilize Your Credit Union
Connect with your local credit union to see how they can help. Ask about their competitive Annual Percentage Yield (APY) rates on their savings and Certificates of Deposit (CD). In addition, many credit unions have a certified financial counselor who can help you with questions and steer you on a path toward a healthy financial well-being. And even if you experience sudden wealth, surcharge-free ATMs are always nice, right?