Finding yourself in the midst of a major windfall can leave you asking yourself many questions. Should I pay off my high interest debt, save it, or spend it? Before making any decisions, consider a few options that can leave you in a better spot from whence you started.
Is Your Financial House in Order?
Before making any decisions as to where your windfall can be best spent, it is crucial to do a thorough analysis on your overall financial situation. If there is any high-interest debt, this should be made a priority. Furthermore, an emergency fund is always recommended. The Best Savings Accounts can help you get started with your emergency fund. It is advised to have at least three months of emergency savings on hand. In addition, There are multiple sources in the news that state that mortgage rates are at an all time low.
Determine Your Investment Goals
If you are in the position to invest, it is first advised to determine what your investment strategy should be. The best way to do this is to consider what you are investing for. What are your short and long term goals for this money?
- Short term – These include events that you need to plan for that are less than five years away
- Medium term -These include anything that falls from 10-15 years.
- Long term (15+ years) – Are you ready for retirement?
The first thing that you need to do is a thorough analysis of what your goals and needs are. Depending on what these include have a factor on what types of investment vehicles you should choose from.
If your financial house is in order, perhaps a good avenue is to put a down payment on a house. There are several websites such as Birmingham Midshires that can assist in choosing the best way to save for a down payment before obtaining a mortgage or investment vehicle.
You do not have to fall victim to a major windfall like the stories you hear of lottery winners or beneficiaries of estates. With careful planning and foresight, you can avoid many of the detrimental outcomes that arise from coming upon a large amount of money. Despite that the fact that careful planning is necessary, always find something to spend your money on that will be used for your happiness.