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Few Young Workers Take Heed of Need to Start Saving Now Monday, March 6, 2006 from USATODAY.com by Sandra Block. Southern Discomfort: Troubles at Atlanta Hedge Fund Snare Doctors, Football Players.
March 9, 2006 from The Wall Street Journal by Ian McDonald and Valerie Bauerlein.
Unlucky Lottery Winners Who Lost Their Money March 9, 2006 from Bankrate.com by Ellen Goodstein.
What is a Financial Windfall?
A financial windfall can be defined as an amount of money that people would be hard-pressed to earn through their own efforts. Examples of this are winning the lottery, receiving an inheritance, life insurance, or selling property.
Steps To Take If You Come Into a Financial Windfall
1. Create breathing room for yourself.
a) Attain a CPA and get tax advice to meet immediate tax liabilities.
b) Avoid impulsive decisions!
c) Make a wish list of everything from houses and cars to vacation and education goals (now lock this list up for 30 days to give you time to settle down).
d) Immediately pay down high interest rate credit cards.
e) Spend no more than 5% on wish list items in the first 6 months.
f) Set aside enough money to cover living expenses for 6 to 12 months.
2. Screw your head down to your shoulders.
There is a huge psychological impact when receiving a financial windfall and the adjustment period is longer for some than others. It is common to experience elation, fear of losing the money, depression, distrust, lack of confidence, intimidation, a sense of loss, feelings of unworthiness, numbness, confusion, and even a desire to give the windfall away. To soften this psychological impact, try taking a break from decision-making. Allow as much time as possible before making major decisions about money or life. Also, consider volunteering for the less fortunate to help you put things in perspective.
3. Organize a Financial Team.
Begin by educating yourself. Read books on sudden wealth and investing. The more you learn, the better your prospects are for a successful relationship with your money. When you feel confident enough about your knowledge level, organize a team of financial advisors. This may include a financial planner (we recommend a “Fee-Only†Advisor), an accountant, and an estate planning attorney. Interview prospective financial advisors in person, asking questions about their professional credentials, the amount of experience they have, and whether they work based on commission or a set fee. Resources for building your Dream Team Financial Advisor: The National Association of Personal Financial Advisors (NAPFA); All “fee-only” advisors.
Accountant: American Institute of Certified Public Accountants.
Estate Attorney: The American College of Trust and Estate Counsel. Lawyers skilled and experienced in estate planning.
