Making the right financial decisions is somewhat easy when you know how much money you’re making. You can check your accounts, make calculations, draw up a budget, then decide on the best financial choices for your family. All of this composure and calmness goes out of the window when you’re suddenly given a large sum of money.
Unexpected influxes of money are rare, but they do happen. The two most probable causes are winning some sort of competition – like the lottery – or sadly finding an inheritance in your hands. While the two situations are different, you end up in a similar position. Suddenly, you have a large sum of money and no idea what to do with it.
With that in mind, here’s some advice on how to react if you’re ever in this position:
Pay off your mortgage
First thing’s first, you may as well pay off your mortgage. This will never not be a good financial decision, as you can free yourself from years of monthly payments. Depending on how much money you suddenly have, this might be all you can afford to do. Still, think about the impact it has on your life. According to The Balance, the average monthly mortgage payments can be over $1,000 for some homeowners. So, imagine you no longer had to pay that each month? It would transform your life and give you more freedom to live comfortably.
Speak to a financial advisor
If you have enough money to pay off your mortgage and then some, you must learn to use it wisely. The temptation is to spend, spend, spend – but don’t do this. Likewise, don’t just dump all of your money in a savings account. Instead, look for people like Glen Clemans of CGC Financial to provide financial advice. This will help you understand the best ways to use your money, getting even more out of it. You could invest it in property, find a better account to keep it in, and so on. Too many people get a large influx of cash and waste it all within a few months. They either go spending crazy or make bad investments. A financial advisor reduces the risks of this happening.
Don’t broadcast the news
Where possible, avoid broadcasting the news about your influx of cash. Especially if you won the lottery, and suddenly have millions of dollars. When people hear that you have money, you become a target. A target for thieves to try and steal your money, and a target for people to come asking for help. Acquaintances start asking for money, people suddenly become your best friends – it’s a very toxic situation to be in. While you might be tempted to scream and shout about any good fortune, try to avoid it. The less attention you draw to yourself, the better.
Naturally, receiving an influx of money will be a massive shock to your system. Regardless of how it found its way to you, the important thing is to avoid going crazy. Try to stay calm, then focus on making the right decisions.