If you have seen the movie “New Money” then you would understand what getting into sudden wealth feels like. Getting a large sum of money, especially one we did not plan for, can be overwhelming. You do not know where to start, and on the first impulse, you think of all the goodies you want to buy with the money. For someone that was not already in wealth, it could be hard to process and make you confused about what to do with that large sum of money. Money is like the wind, and it can go as quickly as it came if not well managed. Most people who receive a large sum of money out of the blue do not know how to manage this money properly, and so they go bankrupt as quickly as they got rich. Take a deep breath and think at this moment because your choices can either make or mar you.
What not to do:
- Spend lavishly
- Tell whoever might want to hear that you are rich
- Change your lifestyle almost immediately
- Live above your means
All these will later tell on you in the long run, and you will regret that you did not do things differently.
What to do when you suddenly receive a large influx of money
Instead of getting carried away with the thought of getting rich and spending lavishly, do the following:
Have a plan
There has to be a plan for everything you decide to do in life. Having a plan makes sure you have a goal/goals and the processes it takes to achieve it/them. It makes sure that your processes are outlined, and helps to keep a check on excesses in case you want to go overboard. A plan shows what you intend to do with the money, what goals you tend to achieve in the long run, and how you could accomplish them without going bankrupt. Planning helps you to spend wisely and keep impulse buying in check. Impulse buying becomes significantly visible when you have a lot of money.
Pay off your debt
Paying your debt seems like a wise decision to take. You have peace of mind when you are debt-free. What would it profit you if something were to happen to the money and you could not cover your debts at that time? It is a wise decision to settle your debts first, before thinking of what to do with the remaining cash. It is only when you settle your debt that you can know what you truly have and plan with it.
With your newfound wealth, you would have to think of how to make it last for a lengthy period. In this case, you will have to use your money to make more money. Investing money has proven to be the source of wealth for many billionaires. Just like Richelle E. Goodrich said, “If you invest nothing, the reward is worth little”. There are different investments that yield high interests in the long run, which you can opt for to grow your wealth and make sure you do not go bankrupt.
Do not change your lifestyle too quickly.
When we see a lot of money, especially a sudden one, we feel the urge to spend and make big purchases because we want to upgrade our lifestyle so quickly. We want to use the most expensive cars and gadgets or even live in a luxurious house, forgetting that all these are momentary needs that will later become liabilities if we do not have enough money to keep up or maintain them. There is an urge to live the big lifestyle and throw money around as we deem fit. This will only make us run into debts that we did not plan for in a couple of years due to a lack of proper planning.
Choose a suitable account to protect your money.
Putting your money in a bank account might seem like a pleasant idea, but in the long run, it will be bad for your money. Because the money is much, selecting a suitable account to protect your money against inflation is pertinent. You also need a bank account that would yield enough interest for your money. FDIC-insured online banks provide more interest percentages than regular banks. A bank account that you can easily lock your money to prevent temptations while yielding high interest sounds like a good idea. Do not let your money lose value if you are looking to keep it for the long term.
Resist the urge to tell the world
With news like this, we always feel the need to tell people about our newfound wealth. While it might seem like a good idea, it usually backfires at the end. Fake friends and family from nowhere might decide to come in to take their share. People think that having money means no problems and that you can afford to throw money around. The truth is that more money is equal to more problems. It is important to tell as few persons as possible. The fact remains that some people will only remember you when you have money or when it is all good but leave you when everything gets worse. Beware of such people and keep your mouth shut.
The best way to avoid something you would regret later is to have a plan for it. You can never go wrong with a plan. Just as Brian Tracy said financial security and independence are like a three-legged stool resting on savings, insurance, and investment. Incorporate these things into your plan and watch your net worth rise to its peak. Download the dodopay app and your finance will thank you for it