7 Things to do With a Lump Sum of Money
Let’s say you’re given three wishes. What are the first things, besides of course one hundred more wishes and world peace, you would wish for? If you’re like most everyone else, it’s a large wad of lots of cash. The good news is you don’t need a genie for that wish to come true. Between tax returns, 401Ks, pensions, inheritance, or even winning the lottery, chances are you’ll at some point in your life end up with a large lump sum of money and left wondering what do to with all of it.
Pay Off Debt
The most responsible thing to do is to get yourself out of debt. Be it credit card, loans, or even car and house payments, clearing away debt should be the first thing to consider. Living in debt is one of the most stressful factors in a person’s life, and having that wiped away can greatly improve your overall quality of life. Sure, you won’t have that 70-inch flat screen TV and new Ferrari in the driveway, but you’ll have the security and relief of knowing that you won’t pass your debt onto your family.
Monthly Spending Money
Have you been dying to eat out at that new restaurant down the street? Or are your clothes worn down to holes? There are many day-to-day wants that most people have a hard time working into a monthly budget. If you find yourself coming into a large lump of cash, considering setting some aside for those occasions when an extracurricular comes your way. That way you have the money for those little things in life, without having to dip into your monthly budget.
Retirement Fund
Depending on how close you’re to retirement, this is a great option. If you’re reaching retirement knowing that you don’t have much money saved, put away a large portion of that money. It may be hard to set it aside, but it’ll be worth it when you’re able to enjoy your golden years complaining about kids these days and napping on the porch in between day time television.
Short and Long Term Investments
It’s always wise to consider investing money into different forms of investments. Short-term investments like money markets and other liquid investment vehicles will offer somewhat lower returns, but with low fees and penalties for early withdrawal. If you’re looking for long-term investments, things like mutual funds or other portfolios will yield better results over a longer period of time, but they’ll need to be invested for longer periods of time.
College Funds
If you have kids, then setting up a college fund for them is another great way to invest your money. Though it definitely won’t be an investment that’ll yield much monetary results, it’ll give your kids the head start they need to succeed. And some day when you’re in your golden years, they’ll be able to repay the favor.
Have Fun
There’s nothing wrong with wanting to have a little fun with your money, as long as you don’t get carried away. Why not plan that vacation that you’ve been dying to take but just never got around to? Or try your luck with some online gambling? Whatever it is that tickles your fancy, it’s ok to indulge yourself now and then.
Charities
Giving back is one of the best things a person can do with their fortunes. What better feeling is there than knowing that your money is going to someone who truly has nothing? There are hundreds of charities found online, and no matter which one choose, you’ll sleep better at night knowing that you gave back to your fellow man.
There are hundreds of ways to spend lump sum of money, and ultimately it comes down to your situation in life and how you want to spend it. There are definitely right and wrong ways to handle your money, but no one but you can decide what those right and wrongs ways are for you.
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Category: Financial Planning
