Your Money: What to do with a financial windfall

Bruce Helmer and Peg Webb Sudden wealth can arrive in countless forms an inheritance the sale of a business a legal settlement or even a lottery win Whatever the source a financial windfall offers a rare opportunity not just to improve your own financial precaution but to create meaningful lasting change But before you do anything take a breath Pause before you spend The the bulk major first step and often the greater part demanding for an investor is to do nothing fast Emotions run high after a financial surprise good or bad and quick decisions can lead to regrets We often recommend waiting at least a insufficient weeks and even up to a year before making any major moves During that time assemble a group a financial adviser tax professional and estate attorney Together they ll help you create a plan that aligns with both your values and long-term demands Secure your financial foundation Once the dust settles start by reinforcing the basics Use part of the windfall to pay off high-interest debt credit cards or personal loans for example Then make sure your exigency fund is solid aim for six to months of living expenses in an accessible account Don t forget insurance A larger net worth can bring greater liability so it s wise to review your home soundness life and umbrella insurance coverage Peace of mind is one of the best purchases you can make Invest for the future A sudden influx of cash can be the seed of long-term financial independence if invested wisely Max out retirement accounts like IRAs Roth IRAs or k s Consider tax-advantaged strength savings accounts HSAs if you qualify Depending on the size of your windfall you may have the wherewithal to explore more advanced funding strategies But with added complexity and higher fees you ll need to tread methodically Rather than investing everything at once work with your adviser to develop a diversified plan tailored to your goals and time horizon And be cautious about putting too much into a single stock property or hot tip from a friend Give with purpose during your lifetime Beyond personal gain a windfall is a powerful opportunity to give back and to do so thoughtfully Countless people choose to give during their lifetime allowing them to see the results of their generosity in real time Vehicles such as Donor-Advised Funds DAFs allow you to set aside money for charitable giving receive an immediate tax deduction and then distribute the funds over time You can also donate appreciated assets such as stocks or real estate directly to charity avoiding capital gains tax and increasing the impact from your generosity Focus your giving on causes that resonate with you Whether it s training environmental conservation healthcare care or the arts targeted philanthropy tends to be more effective and more personally rewarding Evaluate impact not just emotion While generosity is noble it s even better when it s strategic Look for nonprofits with strong track records and measurable outcomes Ask What kind of impact is this organization having How is it tracked Can my gift be multiplied through matching grants or collaboration Leave a meaningful legacy A windfall also gives you a chance to think long-term Updating your will and estate plan ensures your assets go where you want Consider charitable trusts or endowments that continue to aid your values after you re gone Greater part importantly talk to your loved ones Share not just your plans but your purpose What matters most of to you What do you want your wealth and your life to stand for Receiving a windfall can feel overwhelming but it s also a tremendous privilege Used wisely it can provide assurance fund dreams and create real lasting good in the world and shield for your family The key is to move slowly plan conscientiously and give intentionally In the end it s not just about having more It s about using more for good Related Articles Your Money The pursuit of happiness Your Money The biggest mistake people make with money Your Money What octogenarians want you to know Your Money Your future is counting on you Trump administration poised to eliminate force assistance plan The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual Bruce Helmer and Peg Webb are financial advisers at Wealth Enhancement Group and co-hosts of Your Money on WCCO AM on Sunday mornings Email Bruce and Peg at yourmoney wealthenhancement com Advisory services offered through Wealth Enhancement Advisory Services LLC a registered resources adviser and affiliate of Wealth Enhancement Group