Easy Tips for Handling a Big Financial Surprise

• Author: Jessica Williams
• Posted: 2024-09-25

Finding yourself suddenly with a lot of money, like an inheritance, a successful investment, or a pay raise, can be life-changing. 

But it's especially important to be smart about how you use that money, especially if you're over 50. Believe it or not, you can even use a bit of it for fun!
 

Best Practices for Managing Unexpected Money:

1. Pause Before You Act: Jumping into decisions can lead to regret. One story is of a person who sold their business fast and ended up feeling lost. Taking time to discover new hobbies and goals can bring fulfillment.

2. Take a Moment to Breathe: Getting a large sum of money can be overwhelming. It's okay to take a step back and relax before making any big decisions. This could be the perfect time for a small vacation to figure out what really matters to you.

3. Plan Thoughtfully: Think about how you want to use the money. A good strategy is dividing the money into categories: paying off debt, big purchases, saving for retirement, and a little bit for fun.

4. Pay Off Expensive Debts: Using your unexpected money to clear high-interest debt, like credit card balances, is a smart move.

5. Max Out Retirement Savings: If you're over 50, you can contribute up to $30,500 to your 401(k) in 2024. It’s a great way to increase your savings while reducing taxes.

6. Reconsider Your Retirement Plans: A large sum might mean you can retire earlier or change how you work, so take the time to reassess your plans.

7. Keep Some Money Accessible: It's wise to have some of your money in accounts where you can easily get to it if needed, like a high-yield savings or money market account.

8. Spread Your Investments: Instead of putting all your money in one place, have a mix to lower risk and potentially increase growth, especially as you get closer to retirement.

9. Update Your Estate Plan: With more money, you should revise your will, set up trusts, or update beneficiaries to make sure your loved ones are taken care of.

Check Out: The Importance of Having a Will: What Happens If You Don't?

10. Share the Wealth: Consider giving tax-free gifts to family or donating to charities, which can offer personal satisfaction and help others.

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Managing a financial windfall wisely can ensure that the money improves your life and the lives of others around you.

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