A windfall can come from a number of different sources and by definition, it is a sum of money that is considered large enough to make a difference to your personal finances and even your lifestyle.
Some people can be overwhelmed by a sudden addition of extra zeros on their bank account balance and this means that they can often end up making poor investment decisions and don’t make the most of the financial opportunity that has been presented to them.
If you are one of the fortunate few that win the lottery then you have plenty of pleasant options open to you but a windfall can also be in the form of compensation, for example, so with this one, you will need to try and safeguard your financial future if you are unable to work.
Here is a look at some sensible strategies to adopt if you suddenly acquire a large amount of money, so that you can make the most out of the situation you find yourself in.
Becoming a millionaire
Unless you have to share the pot with a few others, the likelihood is that if you win the lottery, for example, you will instantly acquire millionaire status.
Listening to what previous winners have had to say about their experience of coming into a life-changing amount of money, there seems to be a general consensus of opinion that you should not rush into anything the minute the money arrives in your bank account.
This is a good strategy to adopt whatever sum of money you come into. Take your time to clear your head and think about what you want to achieve with your money and what the best way of investing the money would be in order to meet these goals and targets.
Always consider taking the financial and legal advice to confirm if your plans add up and make sound sense to someone independent and suitably qualified to give you an expert opinion.
One of the most common sources of a windfall is to inherit money from a loved one who leaves you a sum of money or property in their will.
It is obviously important to try and make the most of your inheritance and therefore you should consider all of your viable options before actually making a final decision as to what you are going to do with the money.
It would probably be beneficial to pay off any debts that you have like loans and credit cards, as these are expensive to service and will cost you more in interest than the equivalent rate you will earn on most savings accounts.
There is a definite logic to paying off debts with your windfall or savings you now have, as it will free up extra monthly income and almost certainly put you in a better financial position in the long term.
Start by paying off debts with the highest interest rates attached to them, but make sure you have an emergency savings fund still available, in case you need some extra money in a hurry due to an unforeseen circumstance.
Hopefully, you will have received enough money to clear your debts and also invest for the future, so make a plan of what you want to do and then get professional help if you need it, so that you can use the money wisely to achieve these goals.
Charlotte Summers enjoys a successful career in financial services. She is passionate about widening public knowledge on personal finance matter. Her views and ideas can be found on a number of relevant websites
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