What to do when you come in to a large sum of money

What to do when you come in to a large sum of money

Have you ever dreamed about coming into unexpected riches? Most people do. Part of what makes dreams fun is that they don’t have to be realistic, so you can fantasize about spending on all sorts of wildly irresponsible things. Do this with a real-life windfall and the money will very quickly slip through your fingers. Just in case you do come into money, it’s well worth having a plan in place that will ensure it really delivers for you and doesn’t leave you disappointed.

Coming into money

How do real life windfalls come about? The most common form is an inheritance or a large insurance or compensation payout. If you’re a regular visitor to lottery websites, then you might get lucky with the lottery results. If you’re in business, you might have an unexpected offer made for your company, or shares in which you have invested may suddenly increase in value. However it happens, once you have acquired money, you need to hold onto it and make it work for you.

Paying off debt

Often people get carried away with spending sprees when they have unexpected money and end up in a situation where they’re left with debt. Paying off debt should be your first priority. Because you’ll no longer be paying interest, it will make you richer in real terms. If you have a home loan then you won’t normally be able to pay it off all at once, but your contract should usually allow you to make some overpayments. They can reduce the overall amount of interest you’ll have to pay and can sometimes be used as credit so that if you struggle with a payment in the future you can take a short payment holiday.

Buying a house

One way to free yourself of home loan debt is to buy a new place. A big windfall can put you in the perfect position to do that. It’s important to remember, however, that a bigger home will normally entail bigger ongoing tax payments, so make sure that your income can cover those, and don’t be tempted to use your capital as a deposit for the biggest place you can stretch to, leaving yourself with unaffordable interest payments. If you don’t realistically have enough money to move, you could invest some of it in improving the home you have by getting long-needed repairs, installing new double glazing or fitting a new kitchen.


Once you’ve paid off your debts and taken care of your living situation, you might want to think about how you can make the remaining money work for you. Well-planned investments will give you an additional income over the months and years ahead, making your life easier on an ongoing basis. Getting the hang of investing takes a bit of practice, however, so you may want to try making fantasy investments and tracking the performance of shares you’ve chosen to see how they perform, before trying it for real. The key to success is to spread your money across a diverse set of assets to maximize gains without raising risk above a tolerable level.


Along with investing in financial assets, you could choose to invest some of your money in yourself. That is, the most reliable way to make sure you will always have a decent income is to increase your skills. With this in mind, many people choose to spend some of their money on going back to college, either full or part time. With more and more colleges now offering courses tailored to adult learners, that is easier than ever.

Treating yourself

Suddenly acquiring money is exciting, and despite the importance of handling it sensitively, it’s natural that you’d want to spend some of it on something nice for yourself. The trick is simply to keep this in proportion. It could be anything from a makeover to a new car, depending on how much you have – all you need to do is make sure it doesn’t eat into the funds you need for important things. That way you can enjoy your treat guilt-free. You’ll also escape the trap of getting used to regular treats, something which can burn through your money very fast and leave you struggling to survive on the income you had to begin with.

With the right attitude, a windfall can be more than just a short-term cause for celebration – it can seriously improve your life on an ongoing basis, giving you the chance to do things you only ever dreamed of.

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