6 Ways to Make the Best of a Windfall

From: REAP, LLC. | Retirement & Estate Advisors & Professionals

Have you ever daydreamed about receiving a sudden windfall?

At some point many of us will receive an insurance payout, a significant tax refund or a bonus for a job well-done.

Though it would be tempting to put the whole amount toward a luxurious vacation or a new car, it’s important to think about your long-term financial goals, too.

You can still have a little fun, but if you really want to make the most of a windfall, here’s what to keep in mind.

• Pay down high-interest debt first. Credit cards often carry up to a 20% interest rate. After knocking out any of these balances you may have, consider attacking your student or personal loans.
• Build your emergency fund. Sudden unemployment can hurt when you have fixed expenses like rent or a mortgage, groceries, children’s tuition and medical bills. Saving at least three months of living expenses in an emergency fund helps to prepare for a rainy day.
• Up your employee contribution to your 401(k). If you’re part of a 401(k), consider increasing your contribution (especially if you benefit from an employer match). In 2019, you can contribute $19,000 a year or $25,000 a year if you’re 50 or above.
• Invest in a balanced portfolio. Reach out anytime to determine your risk tolerance and discuss your personal goals. From there we can work together and can create a smart investment plan.
• Contribute to your children’s education. If you have a 529 plan for your kids, consider putting a portion of your windfall toward a one-off incremental contribution.
• Invest in yourself. This can be the perfect time to enrich your skills. For example, you might decide to enroll in a “learn to code” boot camp or take a management course. Consider this an investment in yourself and your future earnings.

Have questions? Get in touch to discuss your financial goals and plans.

• Tweet