Congratulations! If you’re reading this, chances are you’ve won a large prize from LuckyCola. As exciting as a big windfall is though, many prize winners end up broke within a few years. Don’t let that happen to you! Follow these tips to make your prize money last.
- Don’t Rush Major Purchases
It’s tempting to run out and make lavish purchases like a new luxury car or dream home right away. However, big buys should wait until you’ve come up with a solid financial plan (see next tip). Sit on your winnings for at least 6 months while making a budget and investment strategy.
- Work with a Fee-Only Financial Planner
Finding an advisor who works on an hourly fee basis, not commission, will provide unbiased guidance. A certified financial planner can help analyze your full financial picture and develop an appropriate asset allocation plan.
- Pay Off Debts Eliminate any high-interest debts like credit cards first. This provides an immediate and guaranteed return on your money versus uncertain investment returns. Next tackle longer-term low interest debts.
- Set Aside for Emergencies Having a cash cushion prevents having to tap risky investments or go into debt again when unexpected expenses come up. Aim to save at least 6-12 months worth of living expenses in safe vehicles like savings accounts.
- Diversify Your Investments Work with your advisor to invest your winnings across different asset classes like stocks, bonds, real estate, etc. Diversification reduces overall risk in your portfolio if one area declines significantly.
- Make a Gift and Charitable Plan Giving back can be very fulfilling. Moreover, tax deductions for charitable contributions can generate more wealth for you to manage prudently. Set aside 10%-15% for causes important to you.
Following these tips will help ensure your windfall leads to long-term financial stability rather than a fleeting moment. Patience and planning now allows your lucky PrizeCola win to provide value for years to come.
