We’ve all had the fantasy. We hit the numbers big time in the lottery. Now we’re all set for life, financially. Now of course the chances of hitting it big in the lottery are infinitesimal, but what if you come into a large sum of money through an inheritance or other means?
When we see those smiling lucky bums with their over-sized lottery checks on the television an we hate them. We think their trouble are over. They’re set for life. But, maybe appearances are deceiving. Many winners might not be used to managing large amounts of money and will winds up blowing through their windfall.
Psychologists who have studied lottery winners found that coming into money doesn’t change who that person is. If the person had trouble managing their money when they weren’t filthy rich, they will have trouble when they are rich. Now we’re not suggesting those reading this are irresponsible. Not at all. We just think if you aren’t used to handling a boatload of money, it’s different than when you are handling an average income.
We have some suggestions. When you get the money:
- Don’t do anything. Don’t go on a spending spree and buy a mansion or things like really expensive luxury cars. Sit on that windfall for six months to a year. Let it soak.
- Wait that same six months to a year before making any life changing decisions. Let the idea that you have this money sink in.
- Don’t automatically quit your job. Even if your job sucks it will occupy your time and keep you away from spending that money. You might also lose the social interaction that you got from friends at work.
- Find a trusted financial advisor. That can be a trusted friend, family member or financial professional. Just make sure thy have your interests at heart an not theirs.
- Pay off any debt. Get out from under owing. Once you have eliminated your debt, that is a major pressure release.
- Create an emergency fund. Take some of your money and set it aside so you will have at least a year of living expenses in case of some financial catastrophe.
- Set up trusts to keep your money from the tax man. Contact a financial pro who can help you set up the trust(s) that are best for your financial situation
These are just a few ideas to how to manage your money if you come into unexpected riches. The best thing you can do is find a reputable financial advisor.