A windfall is a sudden, unexpected profit or gain. It may be a lottery win, an inheritance or a huge end of year bonus. Many would go wild as soon as they get a huge sum of money in their hands, buying even the things they do not really need. However, experts advise that you should first hit the pause button and avoid making hasty decisions. This article looks at a few things to do when you receive a financial windfall.
Plan to invest your money
Once all the euphoria is gone, you need to find a good financial advisor to help you with investment options. One way to invest your money is through buying shares on the stock exchange. Although this is a medium to long term investment plan, its benefits need to be overemphasised. Zimbabwe has a lot of stock brokers eager to assists you on this journey. You may also invest in relatives and friends’ businesses in exchange for ownership in those companies. That way you spread your risk and your money can make you more money almost effortlessly. You just need to ensure that you invest in a business that you believe in. A business which can offer you the best return on investment.
Get into real estate
Buying properties is one of the best ways to invest your money. Firstly, you can choose to stay in your own home without paying someone rentals. Secondly, you may rent out your property and earn passive income from the rentals. If you have an outstanding mortgage, this may be the right time to pay it off and perhaps qualify for a second mortgage and buy the next property. Remember, property is never enough, you need many wise buys, as long as you can afford it. Reputable real estate agencies like Rawson Properties and Fine and Country can assist you in this regard.
Consider pay-out options
You may discover that will get the most out of your money through monthly or annual pay-outs rather than taking it all as a lump sum. This helps you avoid impulsive and irrational spending which may be detrimental down the road. Also, you only take money that you intend to use rather than having large sums of money under your pillow gaining 0% interest.
Pay off your debt
If you don’t manage your debt, you are likely to face financial problems sooner rather than later. In the event of a windfall, it is advisable to pay off your debt. Pay off the most toxic debt first, the one with the highest interest rates. Not only will this give you peace of mind by avoiding further interest, but it will improve your credit record in case you want to apply for other loans in future. Any serious business person will tell you that they have taken loans here and there to cover pressing financial obligations.
Update your estate plan
We all die. If you are married, have children or relatives you care for, you need to leave them something when you depart. As such, when you get a financial windfall you need to update your estate to make sure your money is directed where you want it go after death. While updating your estate is something you should do regularly, it is a must after any life changing event like a windfall. If you do not have a funeral policy, this may be the time to invest in one too.
Invest in yourself
A big windfall may be an opportunity to develop yourself in terms of skills and capabilities. You may want to enrol for a course in an area where you have a passion or have been lacking. In any case, a windfall needs a higher level of financial literacy and this might just be what you need to learn. If you are into business, you may find that you can now afford to attend business networking events, seminars and workshops. You may also want to hire a career coach if funds permit, or do a simple online course. Whatever you do, your money should help you develop and upskill yourself.
Consider making charitable donations to a cause you support. Some may want to give to their church organisation or to underprivileged members of society. Apart from getting spiritual fulfilment for yourself, your donation will help uplift others who are not as fortunate as you are. You never know, these people may assist you in future. In business, they call it corporate social responsibility. Your company will gain massive recognition when you take part in corporate social responsibility initiatives. Somehow, customers want to be associated with companies that do good.
Live a little
Last but not least, allow yourself time to celebrate and let your hair down a little. Look for sales and discounts that allow you to get the best out of your money. However, do not lose track and over spend. Take holidays and relax, but also use this time to recharge and refocus. Its is important not to get into spending habits which you won’t be able to maintain. Keep within your lane and be safe.
A financial windfall can be a blessing if spent wisely or a curse if mismanaged. Decide wisely and seek assistance from qualified and experienced experts. That way, your money will take you places.