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ONE DAY BACK IN 2012, I received a life-changing windfall. Contrary to what you might imagine, however, that day was not very different from the day before it, or the day after. It went something like this: Woke up. Went to work. Came home. Thought about ways to splurge. Ultimately gave up and went to bed.
In other words, there was no visit to the Ferrari dealership, no trip to Las Vegas, really no dramatic change at all. It was, on the surface, a very ordinary day. And the next day was pretty much the same as well.
Don’t get me wrong: Over time, I have made a few changes. My family moved to a new house, we take nicer vacations and we give more to charity. But on that first day, and even in that first year, we did very little differently.
While I’ve certainly made my fair share of financial mistakes along the way, one thing that worked out well was to take things slow. If you see a windfall on the horizon, here is what I would recommend:
You can dream about quitting your job, but don’t do it. First, you’ll be bored. And with more time on your hands, you’ll also end up spending more. But most important, you’ll lose the valuable social interactions that work provides. Over time, you might consider a career change, but don’t walk in that first day and give your notice.
When your windfall arrives, spend time thinking through how you want to use it. Maybe it’s a new car or debt repayment. Whatever you decide, it’s critical that you have some plan. If you’re married, your spouse needs to be on board with that same plan. Otherwise, the money is likely to burn a hole in your pocket, cause marital stress and disappear faster than you had hoped.
Resist the urge to start investing right away. Instead, take time to devise a comprehensive plan and then implement it in steps. There’s no rush, and it’s perfectly okay to sit with a pile of cash while you do your homework and think things through.
If you have a windfall coming, congratulations. No doubt about it, it can be wonderful. But it can also result in headaches and disappointment if it’s mismanaged. My advice: To maximize your enjoyment, take it slow.
Adam M. Grossman is a Boston-based investment advisor. An advocate for financial literacy, Adam regularly teaches an adult education class titled “You Can Outsmart Wall Street.”
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Thank you Adam, very well thought out advice.