Making the Most of a Financial Windfall
Sudden Influx of Money Can Lead to True Prosperity
A financial windfall changes a person’s life. The change is often temporary. The amount of the windfall may be very small or, more likely, the recipient spends the money on items that do not last or are too expensive to maintain. Other times, the change brought by a windfall is permanent, although not necessarily good. Divorce, rifts with friends and family, even bankruptcy are just some of these changes.
“Most people cannot take their emotions out of their money decisions. That is really what drives them,” explained Julie Murphy Casserly in an April 2009 telephone interview with this reporter. Casserly is author of The Emotion Behind Money: Building Wealth from the Inside Out and president of JMC Wealth Management in Chicago. “For example,” she continued, “if someone is racking up a lot of credit card debt and can’t stop spending, that is typically because of the need for emotional satisfaction.”
Lasting Change in Wealth Level is Possible
Nonetheless, a windfall that is used as a lever for wealth creation can bring permanent positive change to a person’s life. But before that is possible, the recipient has to lay the emotional groundwork.
“We need to embrace the fact that we have emotions about our money,” Casserly stated. Whether a person is a hoarder, spender, saver or some other financial personality type, the person must develop a support system of advisers and encouraging people. “In this way, you are able to manifest things in your life” instead of repeating the same old patterns, Casserly observed.
Modest Windfalls – Budgeting for Wealth Creation
With regard to modest windfalls – such as from a bonus, gift, or even a yard sale – consumer finance expert Ethan Ewing, president of Bills.com in San Mateo, CA, stressed the importance of budgeting. “It may not sound exciting or new, but it is the No. 1 sure-fire way to save money and handle windfalls,” he wrote in an April 2009 e-mail to this reporter. According to Ewing, individuals accustomed to living on a budget are less likely to want to spend a windfall on “flashy things that will end up in the trash in 12 months' time.”
Ewing suggested using a modest windfall for:
- reducing high-interest debt
- creating an emergency fund of six to nine months of living expenses
- buying sufficient insurance (auto, house, life, etc.)
- contributing to retirement savings
- making capital improvements to the home
Larger Windfalls – Finding the Right Financial Planner
Casserly believes that anyone can take the necessary steps to prepare for financial security. But, as she observed, “very few of us have the discipline to do it ourselves. It’s no different than a diet: all of us could be in tip-top shape and feel great, but we choose not to. Our money is no different.”
Casserly has her clients articulate their goals, desires, and dreams. She and the client are then able to create a plan that supports those “financial intentions.” By doing this, “you position yourself to be lucky and to get what you want out of life,” she stated.
Carlos H. Lowenberg, Jr., president and CEO of Lowenberg Wealth Management Group in Austin, Texas, believes that a person who receives a sizable windfall is smart to go to a financial planner for guidance. Nonetheless, in an April 2009 telephone interview with this reporter, Lowenberg noted that “most financial planners think of wealth as just the balance sheet, just the facts. They don’t talk about the things that are meaningful to people in their lives.”
That is why Lowenberg thinks it is better to find a financial planner “who is holistic, who advises the clients in all the areas but who also helps them make the connection between their money and their values.”
He added, “If your purpose in life is bigger than your money, whether that’s $10,000, $100,000, or $100 million, you will have much more satisfaction from it.”
Ano Novo
|
What do you think about this article?
More in Business & Finance
Latest Articles