Finally, all your hard work has paid off, and you are making money that you have been dreaming about all these years. The money you knew you deserved and now you’re finally able to live the life you had dreamed of. But hold on one second, if you have sold your business or suddenly started making more money than you know what to do with, what should you do with it all?
Do you even know how to manage this much money? Do you know how to make more? Are there things you need to spend your money on before you can start enjoying it? Whether you’ve made your money steadily or you’ve come into a large sum overnight, there are some key things that you should do with it to make sure that you keep your money and continue to make it.
Clear your debts
Clearing your debts is the absolute first thing that you should do above all else when you have enough money. Whether it’s student debt, credit card debt, or a loan from a friend or family member, then pay it off. You’re not doing yourself any
If you don’t work out these sums in the beginning, then you might find yourself paying the minimum payments and not actually owning your debt. Once you have cleared your debt, then you can finally think about how you can make your money work for you, if there are places you can invest it and how to use it make even more money.
Get to know your cashflow
Many people get to the end of the month – or even a few weeks before the end of the month and look at their bank account and wonder what has happened and where all their money has gone to. You know how much you earn; so you know what comes in and you know how much you spend on your bills, but still, the money is frittering away, and you’re not really learning about managing your money and where it’s going and when?
From the money you earn, there will be retirement contributions, taxes and insurance payments that have to come out and if you’re sorting these payments out yourself, then you will have a better idea of what’s going on, but if you are working for a company or have an accountant who does this for you then, then these amounts probably come out before you even see your payslip.
To really know what is happening with the rest of your hard-earned cash, download a money management app so that you will have a better overview of all your accounts in the one place meaning that you can manage and look at what you are spending far easier than you ever have before. This will give you a better insight and understanding of your relationship with your money and will keep you on top of your finances and hopefully out of debt.
Once you understand what you are spending your money on and what you need and should be spending it on, then you can create a budget for each month and make sure you stick to it. It might feel like you have to restrict yourself at first, especially if at this stage you feel like you should finally be able to enjoy your money, but actually, as you start to budget you’ll soon realize you have far more financial freedom than you’ve ever had before and that you are not wasting your pennies.
Once you have worked out how much you have leftover each month, you should make sure you now put some away into a savings account regularly.
Invest your money
It’s also a really good idea to invest your money in order for it to grow quickly while keeping it safe. If you really want to grow your money, then now is the time to educate yourself on good investments to make such as gold, bonds, stocks, start-ups, and property. If you already have knowledge of the property market or stocks and shares, then use this to your advantage and use your money to put somewhere where you know it will grow and it something you know a little about.
If you have the time, then you should learn about where to invest your money, make sure you speak to the experts, the people who are making a fortune from investments because even though you might be in the money, you probably can’t afford a bad investment.
Decide on your goals
You have probably already had goals in mind for years, but now you finally have some money then things might have changed, priorities might have changed and what you once thought was important may not be now. It’s still a good idea to keep goals though and to stay focussed as if you know you want to buy a house, you will have a figure in mind and a timescale of when you want to achieve it then you’re far more likely to do it.
Managing money isn’t easy and if you’ve now got a lot to play with them one of the most valuable things you can do for yourself is to up your financial IQ by reading books on money management or investing. You don’t even need to be particularly rich to have a money manager, and you can usually get a free consultation where they can help you to see what your options are.
Keep an emergency pot
It is very advisable to have some funds which you can dip into should any emergencies arise such as if your car breaks down, you have a medical emergency, or your laptop smashes.
Invest in yourself
Now you’re making money you can start to put some back into yourself and into your business to make even more. Invest in technology to make managing your business more efficient such as small business accounting software or a new camera for more professional photos for your business.
Think before you spend
The first thing that many people do when they come into money or start earning a lot more is to look for ways to spend it. Some people buy new clothes, a flashy car, a holiday, a second home and then continue going until the money runs out. Instead of rushing out to do this and thinking that your money is unlimited and will never run out, spend some time evaluating your financial situation.
Making an effort to do this will give you a good view of your overall financial condition, including income, expenses, assets, debts, and liabilities. Hire a financial advisor as they can objectively help you manage your wealth as they are certified experts at not only helping you make money but keeping you from losing it as well.
Once your debts are taken care of, and your assets are invested, it’s time to have some fun. If you’ve done your maths, seen a financial advisor and you know you’re going to have plenty of money left over each month after paying your bills, then perhaps you can now splash out on that new car or second home. Discuss it with your financial advisor first though and just don’t overdo it.
Plan for the future of your loved ones
Now that you actually have something to leave them, if you haven’t already make sure you get a will in place to ensure that your loved ones are looked after should anything happen to you? According to Doug Newborn Law Firm, PLLC assets that can be included in a Will include real estate, vehicles, stocks, and financial investments, and business ownership.
Every state has a set of laws regarding what happens to people when they die, but if and when they don’t have proper legal documents in place, the government will seize your assets, and a judge will have to decide how the assets should be distributed. To save your family from this, which is a process is called Probate and can take many months, having a Will in place before your death can make this whole probate process a lot easier for your family members.
Make your money last
Having a large sum of money suddenly in your bank account is a huge test for anyone. Even if you are someone who normally makes sound financial decisions, it is still very tempting to buy everything that you fancy and be generous with the people you know. There’s nothing wrong with enjoying your wealth, just don’t overdo it. Be smart about how you spend your money so that you can keep it for the long haul, make it last and you won’t have to worry about it again.