We all dream about one day winning the lottery or getting a letter in the mail saying that we have inherited a small fortune from great aunt Betty who you never knew. While coming into a sudden windfall may seem like the answer to all your problems, it can actually be the start of problems unless you handle the newly found riches properly. So if your dream just came true, take the following steps to prevent it from becoming a nightmare:
- Don’t do anything before you consult with both a financial planner and an attorney. Every move you make will have tax and financial consequences so curb the urge to go on a spending spree until you have consulted with the proper professionals.
- Remain anonymous. If you won the lottery and your state allows it, remain anonymous to limit the number of people who will contact you asking for money.
- Invest wisely. No matter how much you won/inherited/earned, it will not last forever if you do not invest the majority of it prudently.
- Allow some splurging. Of course you will want to splurge so set aside a percentage or an amount that can be used for this, but don’t go over that amount.
- Stick to a budget. Just because you are now “rich” doesn’t mean you don’t still need to stick to a budget. Your budget may be bigger now, but it is still imperative that you stick to it.
- Create an estate plan. If you are one of the millions of Americans without one, now is the time to create one so that the majority of your newly found wealth isn’t lost in the event of your death or incapacity.
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