6 Foolproof tips for managing a financial windfall

We’ve all probably dreamt of a financial windfall at some point or another, but what should we do when we actually do come into a lot of money?

If you’re reading this you’re probably not the Euromillions winner that won over £190 million or the $1.5bn winner of the Mega Millions, but that doesn’t mean that you might not come into life-changing amounts of money unexpectedly.

This might be from an inheritance, a smaller win on the lottery or a cash prize from a competition you’ve entered, regardless of where it came from, it’s important to manage this windfall so that you don’t end up losing it and the relationships around you.

Steps to managing a financial windfall

1 Don’t make rash decisions

While you might have always dreamt about the ways that you would spend a large amount of money, the reality quite often doesn’t live up to expectations.

Remember you can only drive one car and live in one house and once the feeling you get from spending this has gone, what is left?

That’s not to say that I don’t think that money doesn’t buy happiness, but I believe that it does. It gives you options that you didn’t have and these options will make you happy so long as they align with what really gets you out of bed in the morning. 

2 Be careful who you listen to

When you come into large amounts of money, those around you might all of a sudden become financial advisors and give you a million and one things that you should do.

While some of this advice might seem like a good idea at the time, remember that you have an opportunity to not only change your own life but those of your family too, so them telling you that you only live once and you have to enjoy it, might seem good in the short term, but what about long term?

Your bank might even want to get in on the act and try and get you to buy some of the financial products, but again don’t rush into anything, remember they are there acting in the best interest of the bank, not you.

3 Be selective about who you tell

It’s a sad reality that while money might not change you, it has the potential to change those around you.

There might be an expectation that you will be giving some of this money to friends and family and if you do, will it be enough or will they be cap in hand asking for more later on?

Even relationships that you felt might be able to overcome anything might be strained like no other when money is put into the equation.

4 Create a budget

Regardless of how much you come into, it’s important to understand the benefits of a budget.

Your budget will look different to what it was before the windfall if you had ever created one, but spending for the sake of spending will give you some enjoyment for a little while, but you’ll soon get bored.

You don’t want the money to change you, but enhance the person that you already are. So if you’re already a good person and do good you’re likely to still be a good person but doing more good and so true is the reverse.

5 Seek professional advice

Good financial advice, from a qualified financial advisor, can be worth its weight in gold. 

Not only will they advise you on the best way to make the money work for you, but also advise on how you might be able to protect your family’s interest, help you achieve your financial goals and ensure that you have enough to be able to have a comfortable retirement.

You do need to be careful though as there are some out there that would rather have the money in their pocket than yours so make sure that you have vetted them carefully before handing anything over to them.

Websites like unbiased and vouchedfor will help you with this.

6 Be kind to yourself 

Sudden wealth can bring with it several negative emotions, which might include isolation, a feeling of guilt and fear, not only that you might lose it all but for the safety of your family.

These negative emotions will have a huge impact on your life moving forward, so make sure that you take time out for yourself and the situation that you find yourself in, go for a walk, do some exercise, and consider doing good for charity, this doesn’t have to mean giving money, your time is just as valuable.

If you find that it’s getting all too much, don’t any shame in seeking the help of a professional to talk about these emotions. 

Conclusion 

If ever come into a lot of money at any point, I hope that you come back to this post to refresh yourself about those things that you need to do to ensure that you aren’t going to do anything that you regret later on.

As a recap:

• Don’t rush your decisions
• Be careful whose advice you listen to
• Be selective about who you tell about your windfall
• Have a budget
• Seek the advice of a professional advisor, but do your research to make sure that you’re getting a good one.
• Be kind to yourself.

If you’ve ever come into sudden wealth, did you find that man and his dog had advice about what you should do with it, or did you take time to think of your new situation and what you might do with the money?

Let me know in the comments below.