People dream of attaining wealth suddenly, and while get-rich-quick schemes rarely pay off, there are instances when you come into real money real fast. This could be from and inheritance, a lottery win, the selling of a valuable item or even a lawsuit settled in your favour, but whatever the reason, you are gaining a large amount of money quickly.
You may have a wish list of high-end things you would buy, but many people struggle to handle fast cash and end up squandering it. Then before you know it, you are back to where you started with no real assets left.
Are you wondering how to deal with an instant cash flow so you are cared for for the rest of your life? Here is how to manage sudden wealth.
1. Figure Out Your Net Gain
Winning a lottery is different from an inheritance or selling a huge asset. Some of these windfalls may come with tax implications, and you don’t want a big surprise after you start spending your money. You need to calculate your “end of day” number to know what you are working with.
It is a good idea to consult a financial professional before you cash the cheque as they understand the implications your windfall may have and can advise you on the correct path to keep as much of that money as you can. Once you know your net gain, you can start spending it.
2. Build a Financial Team
We all learn about money as we make it, and depending on your earnings, you may know a little about investment vehicles and how to spend wisely. With a large cash influx, it can be overwhelming, and all you want to do is buy, buy, buy.
The best way to responsibly use your money is with the expert advice of financial professionals. They can offer professional wealth management advice and guidance.
These people include:
- Financial advisor
- Accountant
- Lawyer
This is your base team but can include a money physiologist and publicist. Your financial advisor will be there to guide you and recommend the best investments that can give you a good return while setting you up for retirement. They have your best interest in mind and, along with a lawyer and accountant, will see you retain your assets and build more.
3. Create a Wealth List
This is like a bucket list, but it is more for things to spend money on rather than just experiences. Start with a column listing any debt you have now. This should be eliminated right off the top. The next column is stuff you would like to spend your money on, including:
- New vehicle
- New House
- Children’s education
Depending on the size of your financial windfall, you may also want to retire and travel the world. Write everything down and then rank order them according to their importance to you.
The last column should be for what you want for assets. This may be an investment property, stocks, collectables or any other asset that will appreciate. Your financial advisor can help you with the right investments for your risk tolerance to ensure you don’t run out of cash.
4. Keep Monitoring Your Financial Plan
In the beginning, when you receive your sudden wealth, you are excited and create a financial plan for what to do. As time goes by, this may change, and it’s important to refer back to it and make changes along the way.
It’s okay to go nuts with spending, but you should track it so you don’t go off the rails. Visiting regularly with your financial team will help with this. The good idea is to have a meeting every three months to discuss the following:
- Your Current Net Worth
- A Summary Of Your Investments
- Your Current Cashflow
5. Enjoy Your Money
Managing sudden wealth comes with the joy of spending. Life is short, and you may as well have a good time while still above ground, so take some cash and live it up. Take those around you that you love along for the ride and share memories. Remember that even a huge windfall can be spent up, so put together an emergency fund and invest half of it.
Also, be careful of those that show up because of the cash and risky investments that promise too much. Keep your team well-advised and real loved ones close to protect you and your money. Then enjoy the good fortune and live a blessed life.
Managing sudden wealth sounds like a blast, but it can be challenging. Follow these steps to safeguard what you have and then pursue the things in life you have always wanted. You can help yourself and those around you, so give as you see fit with a generous heart.
