The Koyal Group Private Training Services: How To Manage A Cash Windfall - 0 views
started by Dirk Braun on 05 Jan 15
started by Dirk Braun on 05 Jan 15
Start a New Topic » « Back to the Koyal Private Training Group group
Many of us fantasize about winning a big lottery jackpot.
Let's say that actually happened? What would you do with the money? How would
you manage it?
While winning the lottery is a real longshot, cash windfalls
are not that uncommon. People inherit money or receive a life insurance payout
when someone dies, they sell businesses or professional practices, they win a
judgment in a lawsuit, receive a sizable divorce settlement, or take a 401(k)
rollover or lump-sum distribution from a pension account all of which can
result in a sizable windfall. (For related reading, see: Are Pension Buyout
Offers a Good Idea.)
The number 70% seems to be a common one in terms of the
percentage of lottery winners and retired NFL and NBA players who end up in
financial difficulty. If you're the recipient of a cash windfall what should you
do, how should you manage it?
TAKE A STEP BACK
There is no rule saying that you have to do something with
the money right away. In fact many financial advisers would counsel you take
some time and do some financial planning. This is especially true in the case
of a large and possibly unexpected windfall. (For more, see: What Kind of
Financial Plan Makes Sense for You.)
Don't succumb to pressure from family, friends, or pushy
financial sales types. It's your money and your life. Get the financial
guidance you need, take the time to plan out what you want to do with the
money, and then move forward. Refrain from making rash spending decisions.
HIRE
HELP
Depending upon the size and the nature of the windfall you
will want to assemble a team of experts that might include a financial adviser,
a tax professional, and perhaps an attorney for any estate planning issues
created by the windfall. (For more, see: Fee-Only Financial Advisors: What You
Need to Know.)
If the windfall was an expected one, such as a large
retirement plan rollover or proceeds from the sale of a business, you quite
likely have been working with a financial adviser or tax professional or both
already. Lean on these trusted advisers
for help in managing this windfall.
In the case of an unexpected windfall, your team of advisors
is even more important, especially if you are not accustomed to having money to
manage.
HIRE HELP CAREFULLY
I'm frequently amazed when I read about professional
athletes who have made tens of millions of dollars over their career who end up
in financial trouble. Likewise, with winners of the lottery who go broke.
Often this is attributable to having received bad financial
advice, or worse, having been the victim of financial fraud. While there is no
surefire way to ensure that you don't hire a bad adviser, it pays to interview
several and to do some checking on them. Check out this guide to choosing a
financial adviser from NAPFA.
DEAL
WITH THE EMOTIONAL ISSUES
Windfalls such as an inheritance or a divorce settlement
will likely also come with some emotional issues. The death of a loved one is
always tough to deal with. Divorce may entail anger, sadness, and a feeling of
being alone. In the case of a widow or divorcee, this might be the first time
that you've had to deal with your finances on your own.
It's important to let yourself deal with these issues and
not to make hasty financial decisions based upon these emotions. Also
important: don't let any financial adviser talk down to you because you are
inexperienced in dealing with financial issues. (For more, see: Winning the
Jackpot: Dream or Financial Nightmare.)
LEARN
TO SAY 'NO'
Once family and friends get wind of your newfound wealth you
might find them lining up for a handout. Certainly, helping those close to you
is good thing, but you need to set limits and you also must learn to say no.
Who you help financially and to what extent will depend upon your
circumstances, relationship dynamics, etc. Failing to set limits here is a
great way to end up broke.
PLAN, PLAN, PLAN
The key to your financial success in terms of managing your
windfall is to plan. Specifically have a financial plan in place. Define your
overall financial goals and put a price tag on attaining them. Has your
windfall gotten you to where you want to be in terms of providing your children
with a college education or being able to fund a comfortable retirement? Has it
significantly narrowed the gap from where you are to where you want to be? Is
the windfall enough to allow you to alter your current lifestyle and still
achieve your long-term goals?
THE BOTTOM
LINE
A cash windfall can be a life changing event, especially if
it is unexpected. You want to make sure the impact on you and your family is a
positive one, even if the windfall is the result of an unhappy event such as
the death of a loved one or a divorce. Make sure that you take some time to do
some internal planning and soul searching. Most of all hire a team of competent
financial advisers to help guide you in doing a financial plan, investing the
money, and dealing with any tax or legal implications that might accompany the
windfall. It's your money, take control.
The Koyal Group
Private Training Services designs its online and on-site training to your
particular needs, providing information you can apply while in training in
order to reinforce the efficiency of that information. Our coursework qualifies
state standards both for fraud
and continuing-education upgrade. Our programs are adaptable and can be
presented in various formats to address industry requirements and standards. Please visit and check our course
listings.