When you receive a sudden windfall of money from inheritance, a gift, or for some lucky individuals out there, winning, the extra cash creates an opportunity for you to improve your financial situation. There are several steps you can take to preserve your new found wealth and potentially set yourself up for life goals or early retirement.
The very first step should be to consider the tax implications. Speak to your financial adviser to determine the most tax-efficient strategy.
Set aside a small percentage for your enjoyment or entertainment. Generally this should not be more than 10-15% of the money.
Before you make any big decisions, create a Financial Plan for this money. If you’ve already done this, consider updating your financial goals.
A sudden windfall is the perfect opportunity to review your Estate Plan to make sure that your money will be distributed exactly according to your wishes upon your death…and as tax efficiently as possible.
An Emergency Fund is traditionally 3 – 6 months worth of your salary. This money should be put in a high yield savings account, and the money should only be accessed for true emergencies such as job loss or a medical emergency. Remember to always replenish it after you have dipped into your Emergency Fund.
If you don’t already own a home, this money may make an excellent deposit. If you purchase the house outright and have some funds remaining, consider investing the money you would’ve spent on regular mortgage payments elsewhere.
Speak to one of our financial advisers today to help you on your financial journey!
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