Whether it’s a lottery win, an inheritance, or a work bonus, a windfall can feel like a dream come true, but mishandling it can quickly turn it into a financial nightmare. We dive into the crucial first steps you need to take, understanding the tax implications, setting meaningful financial goals, and creating a solid plan to protect and grow your newfound fortune. And learn about the common pitfalls that can derail even the best intentions.
Liz joins this week’s podcast as we talk about:
– Definition of a windfall and the range of emotions it can trigger
– Shocking stats about how many lottery winners spend their money quickly
– The first thing you should do once you receive a windfall
– The importance of creating an emergency fund
– Understanding and estimating the tax implications of windfalls
– Weighing the pros and cons of a lump-sum versus annuity options
– Common pitfalls to avoid
– The value in seeking advice from a fee-only fiduciary financial advisor
– The basic “ingredients” that make up the personal finance recipe to follow
Show References:
- friends on FIRE podcast #093 – How to blow $600K with The Price of Avocado Toast
- Inside Out Money episode #055 – Our formula for how much to keep in your emergency fund
- M1 High-yield cash account – 12 months of 0.50% APR boost with this link (taking current interest rate to 4.50% APR)
- Wealthfront referral link – high-yield cash account – 3 months of 0.50% APR boost with this link (taking current interest rate to 4.50% APR)
- Inside Out Money episode #022 – How much do you need to retire? Flaws in the 4% rule
- Inside Out Money podcast #058 – Breaking up with your financial planner – Why and how to do it
- Nectarine by Personal Finance Club – Hourly Investing / Financial advice
- Liz Gets Loaded Podcast – 8.4 My honest review of Nectarine
- Inside Out Money episode#094 – Money tips you should ignore and what to do instead
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