If you’re reading this, you’re lucky enough to receive a huge amount of cash. Whether it’s from an insurance claim, a court settlement, a huge work bonus or incentive, an inheritance from a well-off relative, or even the lottery, there’s no question that receiving a large amount of cash can be overwhelming as well as tempting to spend away. But take a breather before you order a new car or plan your trip to Vegas.
Take a Breather and Keep It Quiet
First off, relax. You must be ecstatic about the amount you just received (or are about to). But hold yourself from spending it all over a weekend buying luxury cars, a new house, or a vacation. Sit down and plot out your current financial condition, see what needs to be paid first, and also your foreseeable necessary expenses such as your children’s schooling or your parents’ medication. And most of all, keep it quiet. Don’t go around the neighborhood, your office, or in social shouting about the money you just received. You’d end up attracting the wrong crowd, and we’re not just talking about chronic borrowers or fake friends who wish to take advantage.
Pay Your Debts
This should be your number one priority when receiving a large amount of cash. While it’s tempting to splurge and spend it on things that can make you happy, it’s important to pay off any debts. Sure, it won’t be as satisfying as getting a new car, but your future self would thank you for being debt-free. By paying your debt, you’re buying peace of mind, and that’s a lot better than any Ferrari.
Retirement, Emergency, and Inheritance Fund
There’s no better time to start planning on your retirement and inheritance fund than now. It’s best to set aside money in order to ensure that you can retire without having to worry about money, and it won’t hurt to leave some extra funding to your heirs. It’s also important that you reserve a considerable amount of fund for emergencies such as falling ill, job loss, and other unfortunate circumstances that would directly and direly impact your finances.
Use Your Money to Earn Money
In other words: invest. Invest in the stock market, in businesses, real estate, mutual funds. Use your cash in order to earn more cash, financial stability, and passive income. However, it’s important that you do your research. If news breaks out that you have a lot of funds, there’d be a lot of people who’d want to be business partners or want you as their investors. Don’t let emotion or relationships cloud your judgment, and make sure that you won’t be investing in a scam or something very high-risk. If you’re unsure, you can always contact your local financial management firm in West Jordan to professionally and safely take care of your investments, taxes, and even insurances.
Have Fun, Responsibly
Now that you’ve taken care of the essentials, make sure to allocate a reasonable amount on yourself, your family, or your friends. Perhaps spend on a few clothes and gadgets, or take a vacation somewhere. Make sure that you set a maximum amount that you’re comfortable spending for luxury and only stick to that. It’s important that you don’t end up being a precautionary tale of bad financial management and exorbitant spending. If you think you have impulse control, have someone you trust, such as your spouse or your parents to keep you grounded and keep track of your luxury expenses.
To paraphrase the popular Spider-man quote, with great amounts of money comes great responsibility, and this is technically what it all boils down to: responsibility. You should be responsible for how you manage your sudden influx of funds.