I Won A Windfall Now What

If you have watched the news you heard that 3 people won the lottery for a total of $613 million dollars a few weeks ago. Everyone thinks to themselves, wow I wish that was me. I said the same thing; the only problem is I don’t play the lottery.

 Another name for winning the lottery is getting a windfall. A windfall could also be: getting an inheritance or life insurance settlement, winning a court case or settlement of a legal matter, getting a bonus or pay raise, receiving back taxes, stock options, or any other good fortune.

When you have a new experience or are suddenly thrust into a new situation – family, finances, health, employment, you must seek advice. If the case of receiving millions, you may have experience in your current job but you don’t have experience being a millionaire.

When you start a job you get training, ask questions, read book, and gain knowledge to learn the skills you need to master your job. The same thing is required if you get a windfall. Read books on how to effectively manage money from those who do it well – Bill Gates, Warren Buffet, Oprah Winfrey, Paul Allen (co-founder of Microsoft), Mark Zuckerberg and Larry Ellison to name a few. Here are 16 tips to help you handle managing a windfall.

1. Consult an accountant, lawyer and financial advisor to develop a plan to get advice on how to maximize tax deductions, set aside money to pay taxes at the end of the year, protect your money, how to grow your money while enjoying your money.
2. Create a safety net. If possible, set aside a portion of money enough to cover your monthly expenses and bills for one year.
3. Avoid lavish or unnecessary spending such as buying sneakers for all the children in the neighborhood or buying your family members all new cars.
4. If you loan a friend or relative money make it official by having a lawyer create a contact on the terms of the loan, loan amount, when and how the loan should be paid back.
5. If you wish to give money to a friend or relative consult a lawyer and accountant to document the gift and ensure that the money is properly accounted for on your taxes.
6. Consider purchasing an item that will appreciate over time such as an investment property.
7. Pay off all debt. If the only debt you have is your mortgage consult a financial advisor to discuss the advantages and disadvantages of paying off your mortgage early.
8. Contribute more to your retirement account if your balance is not on target to meet your retirement goal.
9. Setup estate planning including a will and living trust.
10. Set aside money for your children’s or grandchildren’s college education.
11. Perform standard home repairs, avoid lavish repairs such as adding marble floors, etc. which will not add enough value to your home to recoup the costs of making the upgrades.
12. Donate a portion of your money to charity to help those less fortunate which also serves as a write-off on your taxes.
13. Make it difficult to access your money such as putting a portion in an online account or account in another city or state to reduce the temptation to spend the money.
14. Diversify. Don’t put all of your money in one area, diversify to minimize losses.
15. Set Financial Goals. Set financial goals with target dates on how to grow and spend your money.
16. Review your account yearly to make any necessary adjustments and to ensure that your money continues to grow.