At some point in our lives, many of us are lucky enough to come into a lump sum of money. That might be for one of many reasons, such as a pension fund, inheritance, a redundancy payout, a bonus from work, or maybe you’ve even struck it lucky and won the lottery! But it’s hard to know how to deal with that amount of money once it’s in your possession. Here are some tips on how to manage it.
First of all, keep it quiet. It’s great to be able to treat your closest family members or friends to a nice meal or day out, but other than that, you might find yourself the recipient of a lot of requests for money or loans that you might find hard or awkward to refuse. Remember that your priority should be yourself and your closest family before you deal with the needs and wishes of others. Still, you might feel happy to donate some money to charity to help out some people who are less fortunate than you.
Secondly, pay off your short term debts. Do you have any credit cards or store cards that might be amassing more interest than you want to think about, or an overdraft that keeps you awake at night? This is your chance to rid yourself of that burden. Once you’ve done that, make sure you have a pot of savings in the bank for a rainy day fund.
If you have more money than that, consider paying off your mortgage. Having a home that’s fully your own will release another financial burden on you and free up a lot more of your monthly wages. You should also consider your pension – have you been worrying about what’s going to happen to you in your old age? This is your chance to sort that out.
Perhaps your windfall is more significant than that, and you’d like to invest it. One of the most tried and tested methods of investing your money is into property. If you decide to go for an investment property to let out to tenants, you know that you’ll have a steady income from it every month. Of course, investment properties also come with their fair share of responsibilities – it isn’t like handing your cash over to a bank and watching the interest grow, or investing in stocks and shares. It’s important that you select your investment property carefully. You should make sure that you research the neighbourhood that you’re considering, and that you make sure that the property is set to grow in value. It’s important that you maintain your property. If you’re thinking about triple net properties then your tenants will be responsible for upkeep on the house but otherwise you’ll be liable to replace the fittings and fixtures, and making sure that your property is at a good standard for your next set of renters whenever your tenants move out.
Finally, make sure to talk to some financial advisors! The hardest thing about coming into some money is managing it. Make sure that you assess your priorities carefully and calmly and take some time before making your final decisions so you don’t make any mistakes. Good luck!