Money – the world’s strongest and most influential piece of paper ever made by mankind. Everyone agrees that money has a strong impact on our lives. Many people struggle to earn money, while some others are lucky enough to have a whole lot to waste. But sometimes, you just never know when you may get struck with sudden wealth, or just lose it all in a jiffy.
There are many ways people may get struck with sudden wealth; through an unexpected inheritance via someone’s will; by winning the lottery or just through a sudden, substantial raise in income.
When struck with sudden wealth, many people may go off the rails with spending and fail to manage it all properly. Whilst, there’s nothing much wrong with having a bit of fun with your new found wealth, wouldn’t it be grand to manage it better so you can enjoy longer?
Today, we show you how.
The B-Word: Budgets
If you’ve suddenly got a huge block of cash or received a raise that will give you more cash every month; making a budget for the addition will go a long way. Without a written guide, you’re sure to not see where all that money is flowing and you’ll end up with a big fat empty checking account and the strange sense of wondering what had happened to it all.
Got a budget? Great, now it’s time to put the right things it and you can only do that if you have your priorities right. The expenditure of the most important and necessary things should be given priority.
Do you have outstanding bills to pay; credit card debt or perhaps a medical check you’ve been putting off? These are just some of the items that should take priority on your list but it could be anything that you need to function well and provide for your everyday needs. These include but are not limited to:
1) Medical needs;
2) Clearing down of debt;
3) Buying an asset – such as a home;
4) Buying convenience – such as a new vehicle or buying a home security system;
5) Saving for a future necessity – such as a child’s education fee or an elderly parent’s medical procedure;
6) Putting your current assets in good order – such as car maintenance, home renovation or optional medical procedures.
Once you have covered the basics of what you need and still have left over; it’s time to make that money earn for you. Allocate an amount in your budget to invest in anything you wish really.
Fixed Deposits are easy and low risk investments for first timers. The yield may not be as lucrative as more risky options but there is no real investment know-how required. The only thing is in comparing the options offered; but hey, we took the guesswork out of that for you too.
If you are planning to invest in a house, do take into consideration the varied pros and cons for doing so. If you’re sure it’s the route to take; you can then think about the other factors linked to choosing a home.
By and large, many people do swear that property is a good investment vehicle but as with anything in life – there will be strengths and weaknesses to this plan.
If you have come upon a really large sum; there are many other investments you can consider such as building your own business or hiring a broker to play the stock market.
Be Wary the Opportunists
Whatever you decide though, make sure you go in with eyes wide open (that is, do your homework!). When you come into a sudden large sum; you can be sure more than one scam artist may come out of the woodwork to relieve you of your money – don’t get caught!
Before signing on to any venture, make sure you read all the fine print and get as many opinions and reviews as possible. If you’re unsure of anything, it’s probably best to hold off on the signing.
Handling Lifestyle Inflation
Lifestyle inflation is when an individual progresses well and starts to
earn more money than his/her previously routine earnings. But instead of finding him/herself better off, he/she ends up inflating lifestyle expectations and needs running up much larger bills than before, negating any real benefit brought about by the increase.
Where possible, make financially sound decisions. If you’ve received a promotion requiring more networking, then it may be necessary to change your wardrobe to suit this; if you have a baby, it may be reasonable to get a bigger home than your single room love-nest. What a promotion doesn’t mean is that you suddenly decide to eat only filet mignons or wear Prada loafers as a rule.
Factor the Fun
All that drab stuff said and done, let’s face it – you probably worked pretty hard for the extra money. Whether it was by buying lottery tickets every day or by putting in the extra hours. The money is in and there’s no reason why fun shouldn’t be part of your plan.
Have you got all the necessary stuff done pat? Great! Now allocate your ‘fun money’ and go do whatever you want! Buy something sinfully decadent; go on a trip or just whatever you fancy.
Factoring fun is important because you don’t want to feel more burdened by your extra money than happy (what, paying bills, bills, bills, only? Who am I, Destiny’s Child?).
Budget for the wants alongside the needs for a truly rounded picture. Enjoy your newfound wealth!