One of the sad and unfortunate realities of life is that many of us are unable to take advantage of a windfall when it comes our way. Take for example the number of people who have won a lottery, blown it in a variety of ways, ranging from bad investments to simple waste, only to finish up broke again. If you happen to run into an unexpected windfall of any size it can be a good time to look around a bit and compare term deposits. But what would you really do? It’s worth thinking about as you never know what is waiting for you around the corner.
Experts on money handling matters differ with the advice they give to the average punter on the best way to handle a windfall, but it appears the common thread among all is to take a deep breath and think for a while before doing anything at all. The following list gives good advice worthy of putting into practice, even though some aspects of it might not always be palatable under some circumstances:
- The first thing you must do is to pay any taxes that fall due because of your windfall for if you don’t it will come back to haunt you, especially if things eventually go ‘belly up.’
- It is no good to anyone if you come into a large amount of money and don’t get to enjoy any of it by spoiling yourself in some way. For this reason get it off your chest right from the start and take one or two percent of the windfall amount to blow on a celebration of some sort. If your windfall was $100,000, $2000 of it won’t hurt much, but will give you a good feeling of having achieved something worthwhile and really enjoyed your winnings.
- Debt is the biggest obstacle of living freely, so before considering term deposits or anything like that, get rid of your debt. Debt is like a chain around your neck and must be gotten rid of at all costs. Even if all your windfall money goes in paying off debt, do it, as it will immediately release a cash flow that you can use to start re-building a windfall in the form of savings and investments.
- Debt taken care of and celebrations out of the way, your next step should be to compare term deposits. This move will see the windfall money put into a safe place that will earn you interest while you sit back and decide what’s best to do with it. Once again you will be using time to your advantage and not rushing into something you might later regret.
- Leave the money in your chosen term deposits while your initial emotional feelings pass. You have resisted the natural urge to buy that bigger home and continental car. You have succeeded in living your life without change. You are now debt free and life is good, so pat yourself on the back for your show of maturity and patiently wait for your term deposit to mature.
- While waiting start making your ‘wish list.’ Think about what your windfall money could buy. Give it serious thought and don’t be afraid to change your mind. The human brain often feels differently about things today than it did last week , especially about what you think you want but don’t necessarily need.
- Finally your term deposit time is up. It’s time to make a decision. The best way to come to the right decision is to not make it yourself. Get help from a professional, but not one that earns his or her living by taking commissions. Look up a good CPA. Make your comparisons carefully, using term deposit comparison sites to help you out, ask around and act on referrals. Whoever you finally settle for, make certain that he or she doesn’t sell any type of investment product.
The handling of a windfall in this way will give you time to come to terms with your new financial position, which, in turn, will see you come back to earth and finally come to terms with your changed financial situation. When you compare term deposits you will see how much difference there is in what is offered by the different financial establishments but whatever your choice you will still be earning interest while you are contemplating your next move. In short there are only four major points that you have to consider, these being:
- Retire all debt.
- Create a budget so that you never get into debt again.
- Save your money after you compare term deposits.
- Invest your windfall money wisely.
By removing debt from your financial scene, living within your budget and investing your earnings from the best term deposit account, you will not need a windfall to get you out of financial trouble, you won’t find yourself in such a position in the first place.
Savings Account Finder
Savings Account Finder ) helps you compare online savings and term deposit products in Australia. We blog about useful personal finance matters and general tips to help you achieve financial independence.