Sudden Wealth Management Tips
Protect your windfall with our money management suggestions.
If you have suddenly come into a large sum of money, whether itâ€™s a payout from an inheritance, the lottery, stock options or a favorable verdict in a lawsuit, there are some important steps you might want to take.
First and foremost, try to keep your bearings about you. Donâ€™t immediately quit your job; avoid any temptations to spend most or all of it on frivolous items.
Be on the lookout for crooked financial operators who make offers that seem too good to be true, or friends and family who appear out of the blue with loan requests and business proposals.
Don't feel you have to invest your money right away. There's nothing wrong with letting it sit in the bank while you carefully consider your options.
No matter how you've obtained your windfall, there will be tax consequences. It is highly recommended you consult with a tax lawyer to make sure you follow the right steps.
Before planning your long-term investment strategy, make sure you've taken care of some immediate needs. Establish an emergency fund (make it three to six months' worth of expenses), and if you've been carrying consumer debt like car loans or big credit-card balances, now's a great time to pay it all off.
Finally, consider how your windfall can serve you for long-term goals such as paying for children's education and your retirement.
The questions are many. You might want to consult with a financial planner, who can help you figure out all the complicated variables and options.
Source: © 2012 Morningstar. All rights reserved. Used with permission.