Windfalls are unexpected gains, money, or profits that typically involve receiving large amounts of money. The financial windfall can be thousands or even millions of dollars. Developing a smart and sound money strategy for a financial windfall is essential to an individual’s ability to capitalize on this unusual, financial fortune. Financial windfalls derive from various sources, whether an inheritance, profitable investment, sale of capital assets, sale of real estate, or even gambling winnings. For many, competing, overwhelming emotions often shadow the best outcome for financial windfalls.
Unfortunately, most financial windfalls are mismanaged. As a consequence, the individual who receives the financial windfall predictably comes full circle to the original financial position. More times than not, the individual’s financial condition worsens, and that person has more financial challenges and problems than before the windfall was received. There is no reason for anyone to fall victim to such financial misfortune.
Major purchases and splurging should be avoided. Significant life changes should continue to be well planned and thought through. Spending too much too fast, ignoring tax consequences, being overly generous, or purchasing diminishing assets are a few risks to understand as it relates to financial windfalls.
Make plans for the financial windfall once the initial excitement has settled. Assess the resources needed to pay off high interest and long-term debt. Identify current, future, and long-term financial demands. Invest and diversify your investment portfolio. Consider charitable contributions that support causes that you believe in and support.
A well-managed windfall can result in generational wealth for an individual and the individual’s family. Carefully consider the ultimate financial goals. Stratify these goals into short-term, long-term, retirement, and transference. Give the windfall an assignment so that you are clear on exactly how you want the money to work for you. Develop a written strategy. Seek counsel from at least three financial and investment professionals. Utilize the information gained from the discovery meetings to tweak the strategy.
To schedule a consultation with Nicole Michelle, feel free to connect with her on the Home Page.
Nicole Michelle
Finance and Money Wiz
March 8, 2024
Comments