OMG, I’m Rich! Now What?

Rich!Five tips on how to save and play responsibly with your newfound wealth

Have you just landed a big windfall? Maybe you’ve received an inheritance, gotten a bonus at work, sold your business, or won a lawsuit. Congratulations on this infusion of cash. You now have the means to create more financial stability in your life, treat your family, and plan for a safe financial future.

But take heed! A windfall can easily go to a person’s head, and if you don’t plan properly, that money can burn away fast. Here’s  five tips on how to save and play responsibly with your newfound wealth:

1. Work with a Financial Advisor

If you’ve never been on a boat before, you wouldn’t just hop aboard a big ship, grab the wheel, and hoist anchor, right? You need a captain to steer the ship to its destination and avoid crashing onto the rocks. Your financial advisor is your financial captain, guiding you on how to protect and grow your money.

2. Get Ready for Taxes

Unless your money comes from an inheritance, chances are that you are going to have to pay taxes on your windfall. Make sure you have a clear picture of how much you’ll have to pay in taxes so that you don’t start spending money that will have to go towards taxes.

3. Address Immediate Financial Needs

Chances are that your financial picture wasn’t perfect before your windfall. Did you have some credit card debt hanging around, a car loan only half paid off, or a wimpy savings account? Use your windfall to help fill these gaps. Pay off debt, build up your rainy day fund, and speak with your financial advisor about updating your insurance.

4. Invest for the Future

Your newfound wealth doesn’t just have to sit around in the basement (unless you want to take a swim in it from time to time like Scrooge McDuck). Instead, put that money to work. Speak with your financial advisor about maximizing your retirement savings and then start building an investment portfolio. Your advisor can help you build trust funds for your children and even set up investment accounts that pay you each month.

5. Splurge Smart

You’ve probably got a long list of things that you’ve always wanted to buy, like a sleek new car, a bigger house, or a month-long excursion to Tahiti. Your money can help finance your dreams, but use it for the necessities of your life with some nice treats thrown in, rather than opting of a new, high-flying lifestyle you can’t afford.

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