As I am sure most of you have, I have always dreamed of winning lotto and have often day dreamed about how would spend that cash.
Whilst lotto might not be a reality, you could still experience gaining a hefty sum of money from things such as a inheritance, bonus, sales of a business or some other event.
If you are lucky to come into some money you may not know where to start. Here are some ideas that might help.
Sleep on it
Whilst it is tempting to go dump a whole heap of cash on a new car, you really should stick into some savings for a while. If you don’t, you might find you go spend it on certain things when you really should have done something else.
End result-it is gone and you will be kicking yourself. You should also investigate what tax implications you may be up for before blowing it all.
Think about emergencies
If you don’t have an emergency fund set aside do it now whilst you have the cash. Whilst people differ on how much money you should have set aside it tends to average around 6 months worth of living expenses.
This makes sure that if something happens you will be able to cover it without going into debt. It also gives you some peace of mind that you and your family are protected.
If you have a lot of debt over the place whether it be credit cards, car loans, personal loans or your mortgage, now might be a good time to pay it off. Being debt free not only reduces your life stresses, it means you will have extra cash month by month to look at other investment options for your future.
Paying off your debts might depend on your interest rates and your life stage. For some people it might pay off more dividends to invest the money if their loan is on very minimal interest rates.
In Australia because we have HECS and HELP systems for university this may not be a priority for your money. If however you want to consider private education for your children you may want to look at the best way to set up a pool to have enough money to cover this expense.
Invest in your retirement
If you are able to you want to make sure you have enough money to sustain your desired lifestyle in retirement. The pension is a very minimal payment and may not be enough to fund your expenses.
Creating an investment portfolio to build up these funds may allow you to have sufficient money and possibly help you retire earlier than you intended. Talk to your financial planner or accountant about the co-contribution schemes that are available to make more from your money.
Look at your wish list
You may be able to have enough to spend some of your cash on something you always wanted. This might include a dream holiday, purchasing a new car, renovating your home or even upgrading to a larger home. Whatever it is make sure it is sustainable. So if you purchase a larger, more expensive home but still have a mortgage, make sure you will be able to maintain the repayments.
If you do come into a financial windfall take your time before splurging all the cash. Seek out professional advice to understand what your obligations are in different scenarios and what difference it makes to you to pick certain options.