The shock of a sudden windfall can set off a litany of irrational behaviours, such as giving all the money away, becoming a recluse, spending the money lavishly, or hiding or hoarding the money.
First, stop, take a deep breath and picture how you’d like your life to look in five, ten, and maybe even 20 or 30 years. Where are you living? Are you retired? Travelling the world? Still working, but with less financial stress? Jot down your visions so you can keep that picture clear.
Setting some goals drives your decisions about what to do with your windfall. With a direction in mind, you can plan more effectively.
This guide explains some of the key steps to making the most of your windfall:
- Make a plan
- Pay off debts and possibly your mortgage
- Bulk up your emergency fund
- Think about your children
- Don’t leave it all in the bank
- Use your tax-efficient ISA allowance
- Invest in a pension
- Invest in property
- Buy an investment you can forget about
- Give to charity
