3 Smart Ways to Manage a Windfall

While a lot of people might be bona fide geniuses or just really hardworking, and even get paid for it, that doesn’t mean they know how to handle their money.

If you are either of these types, there’s every chance that you might receive a windfall or a bonus.

It’s paramount that you know how to make your money work for you. Here are 3 clever (but necessary!) ways to manage a windfall:

1: Prepare clear financial goals

Once you receive a windfall, make sure you plan out what you want to do with it clearly. Maybe you want to pursue a passion or even accomplish something either financially, personally or professionally. Or you might even have issues to sort out as well. Once you figure this out, then you can build a strategy for both the short and long-term.

2: Know what the tax implications are

You can be sure that not all of the money will end up in your pocket. If it is taxable, then you will be pushed into a higher tax bracket. For this, it is important to invest in a tax-qualified plan that offers deferred growth. Of course, if you want to donate to charity, this will have associated tax benefits too. Make sure you know your limits.

3: Ascertain where you can afford the things you are buying

Making lifestyle choices that depreciate in value is a no-no. Consider yourself as a big-athlete whose earning days might come to an end soon. With that in mind, plan for the future. Of course, most people might buy property as soon as they begin to make money but it’s important to know for sure whether you will be able to pay the mortgage for the next 30 years or so.