Get the Most Out of Unexpected Money -- Savings Experiment

Get the Most Out of Unexpected Money
Get the Most Out of Unexpected Money

Whether it's an inheritance, a settlement, a bonus or lucky lottery ticket, you may find yourself with a large sum of unexpected money. It's a great problem to have, but studies have shown that up to 70 percent of people tend to spend it all within a couple of years. Here are a few tips to help you keep your sudden windfall from disappearing into thin air.

Big money always tends to stimulate big spending, which is why your first step should be to wait six months before shelling out a cent. This means no luxurious gifts for your family and friends, no new investments and no exotic vacations. Give yourself some time to come up with a solid plan, so you don't make any impulsive decisions you'll regret later.

Next, to help you with those plans, consider hiring a qualified financial adviser to help you create a budget and do some long-term financial planning. To help you find an advisor you can trust, ask friends for referrals and always check credentials by going online to sites like Finra.org. Here you'll be able to enter the background of an investment professional and receive full disclosure about their track record and practices. And while you're looking, try to find an adviser who is paid by the hour, not by commission.

Lastly, always assess your financial weaknesses, so you can strategically use your new windfall to improve your position. For example, if you're behind on the mortgage, use your money to catch up and eliminate those late fees. Or, take a look around the house and try to focus on things that will reduce your overhead, like installing energy efficient appliances.

Remember, just because you have money falling from the sky doesn't mean your head should be in the clouds. Use these strategies to get the most out of your money, while keeping your good fortune from going up in smoke.

%Poll-90823%