Coming into some money is often a huge cause for celebration.
Maybe you’ve got a bonus after a year of hard work, or you’ve won some money on the lottery – or maybe, a little more sadly, you may have inherited some money from a family member.
When you unexpectedly come into some money, it can be difficult to figure out what exactly you should do next.
A lot of us have the immediate urge to go on a shopping spree, buy sports cars and a mansion, and to come home bedecked in diamonds – but of course, blowing it all right away is never a good decision!
Here are some tips on what you should do to make sure that your windfall helps you out as much as possible.
#1 Pay Off Your Debts
A lot of people have some debts, which can be extremely stressful.
Credit card debt can be very stressful to pay back because of the high rates of interest, which mean that you end up paying a lot more money than you spent in the first place.
Still, a lot of people find themselves in that position, particularly as young adults when they’re still figuring out their financial situations and their credit cards seem like a great way to buy a couch and decorate their entire apartments and buy cocktails for everyone at the bar, instead of something that should be used judiciously and paid back carefully to build up your credit rating.
Get the weight of debt off your back by paying your debts. Even if you only have enough to cover that, the lack of burden immediately afterward will be incredible.
#2 Repair Your Home
If you have enough money to immediately move to an enormous mansion, that’s great. If not, you may be focusing on how to improve the home that you currently live in.
One way to make your home bigger and to increase its value is to add an extension – maybe you want an extra dining room separate from the rest of your home, or a bigger kitchen, or for your kids to no longer have to share rooms with each other.
No matter what your exact reasoning is, making home renovations can significantly improve the quality of your life and your family’s lives.
Other renovations that can really improve the value of your home are new bathrooms and kitchens – when people are moving, they often want properties that they won’t have to update themselves too much.
#3 Pay For Your Kids’ Education
One of the best things to invest your cash in is your children’s future.
Adding to their college funds is one of the absolute best things that you can do. One of the most stressful things for young people considering going to college is the amount of debt they know they’ll incur because of it, so anything you can do to alleviate that burden will be money well spent.
#4 Consider How To Invest Your Money
There are plenty of ways that you can invest your money so you end up making even more.
Stocks and shares are one of the most popular ways to invest money, although this often requires a broker and some knowledge of the financial market.
If this doesn’t sound like something that you want to spend your time doing, you could always consider investing in property, whether that entails buying a rundown property, renovating it, and selling it on, or picking out a house to rent – just make sure that you look at the current market first.
You can be as creative as you want there, meaning that you can change around the inside of the house and decorate it, depending on what exactly you want to use the property for.
It’s important to be aware of the area that you’re investing in – if you want to rent to young commuters, it’s important to make sure that public transport stations are nearby, and if you want to rent to young families, then you need to ensure that the schools in the local area are good quality and that there are plenty of local amenities like playgrounds and swimming pools.
You could even buy a holiday home and use Airbnb to rent it out to people coming to stay in your local area. Being a landlord is a lot of responsibility, so only do this if you’re sure you have the time to handle it.
#5 Talk To A Professional
If you’ve never really had to consider how exactly to spend your money before, if it’s mostly just gone on rent or your mortgage along with whatever necessities that you and your family require, then it might be hard to figure out what exactly you should do with a landfall.
Remember there’s no shame in talking to a professional – your bank will be able to help you figure out which account is the most profitable and how you should invest it, and what exactly your money is worth.
Don’t be afraid to ask for help.
#6 Help Out Your Family
First and foremost, remember that you’re under no obligation to give money to your family, particularly if they make you feel guilty about doing so.
Money can drive a wedge between friends and family members. Don’t tell anyone except for your absolute closest family members like your partner exactly how much you have, as you don’t want anyone to expect anything from you.
Pay for dinner when you go out if you can afford it and be generous with gifts, but don’t get too flashy or you might be resented. Remember that it’s more important to give to.
#7 Enjoy Your Money
Finally, it’s time to enjoy your newfound wealth!
Make sure that you prioritize experiences over items – the memories of a great vacation will last a lot longer than a designer outfit, and studies have shown that people regret splashing out on experiences much less than possessions – buying stuff won’t give you nearly as much satisfaction as you might think it will.
If you do want to go for fashion, go for classic items like trench coats and bags that won’t age.
Have You Recently Come into Money?
What did you do with it? Did you do any of the tips I shared above or did you do something completely different? Share your thoughts and comments below.