News & Advice

Getting a large amount of money might be a dream come true, but be careful to avoid making decisions that can actually make your life more difficult. In reality, if you receive a large sum of money, a lot of careful planning and decision-making is required to set yourself up for success. 

Whether you’ve received money from lottery winnings, an inheritance, or a large bonus, these are the steps you should take if you receive a large sum of money. 

PAUSE AND EVALUATE 

If you receive a large sum of money, you’ll feel an emotional high. First things first — avoid impulse buys. This means you need to take some time to pause and think before making any purchases. Remember that a lump sum of money isn’t income that will continue to roll in, and making rash decisions or impulse buys can lead to a messy future. A nice boat isn’t a one-time purchase, for example. It requires a lot of upkeep, storage space, gas, equipment, and more.

While it might be tempting to call all your friends, tell your whole family, and post on Facebook for the world to see, it’s also wise to not tell everyone about your new money. Don’t put a target on your back.

LOOK AT YOUR FINANCES AND GOALS

Take stock of how your finances look currently. Some big questions to ask yourself could include:

• How much debt do I have to pay off? What debt has the highest interest rate? 

• How much, if any, am I saving for my children’s education and other milestone life events, like weddings? 

• How much am I attributing to my retirement savings?

• Do I have life insurance and a current will? 

• Am I making the most of the money I have saved? Have I invested any money or put it into a savings account that helps it grow? 

If you have financial goals, don’t let them go out the window when you get a large sum of money. Ask yourself what’s important to you and remember that money can’t buy happiness. Before seeking counsel from financial professionals, get organized so you can present your current financial situation to them. 

GET ADVICE FROM PROFESSIONALS

Working with professionals is an excellent way to make the most of your money. If you’re in a new tax bracket, you might need to rethink or add on to your team. Along with a financial advisor, consider working with people like an attorney,  an accountant, and an investment advisor. 

Your team can help you figure out investments, the best place to keep your money so it can grow, and can walk you through the tax implications of having this money. 

MAKE A FINANCIAL PLAN 

Now that you have advice, set up your action plan. Determine how much money is going to go where, then make it happen. 

At INOVA Federal, we offer solutions that can help with your money management, like money market savings accounts and financial management accounts. Apply for our services online or visit one of our branches to speak with us in person.