One of the harsh truths of life is that many people fail to maximize unexpected financial gains when they come their way. For instance, numerous lottery winners squander their winnings on poor investments or frivolous expenses, only to end up penniless again. If you unexpectedly come into a substantial amount of money, it’s an excellent chance to compare term deposits. Yet, what action would you really take? This is certainly a question worth considering since no one knows what lies ahead.
While financial experts vary in the advice they give regarding windfalls, the consistent theme is to step back and assess the situation before making any hasty decisions. The following tips should prove beneficial, even if some of them might not feel comfortable under certain circumstances:
1. Pay any due taxes associated with your windfall immediately. Ignoring this step could lead to future complications, particularly if your financial situation takes a turn for the worse.
2. Reward yourself. If you acquire a hefty sum of money and don’t indulge a bit, it’s not beneficial for anyone. Initially, take 1-2% of the windfall for celebration or self-treatment.
3. Resolve debts. Debt restricts your freedom, so before considering documents like term deposits, eliminate your outstanding debts. Even if your only pecuniary windfall goes towards this, it’s worth it, as the subsequent liberated cash flow can be utilised for savings and investment.
4. With your debts paid off and celebrations done, the next step is to compare term deposits. This will secure your money in a safe place and earn interest while you determine the best course of action.
5. Allow your investment to mature. Leave your money untouched while your initial emotions subside, refrain from impulsive purchases and continue living life as usual.
6. While waiting for your term deposit to mature, it’s a perfect time to start considering your “wish list”.
7. Once your term deposit matures, seek professional financial counsel before making any decisions. Always ensure that the person you consult does not earn their livelihood through commissions.
The organized handling of a windfall allows you an opportunity to understand your new financial status. Comparing term deposits reveals the significant differences in offerings by diverse financial institutions. But, regardless of your choice, you’ll continue earning interest while contemplating your next move.
In essence, there are four key factors to bear in mind upon receiving a windfall:
1. Pay off all debt.
2. Create a budget to avert future debt.
3. Save your money after comparing term deposits.
4. Invest your windfall wisely.
By eliminating debt, adhering to a budget, and investing your earnings from the best term deposit account, you’ll avoid encountering financial trouble.
The Savings Account Finder aids you in comparing online savings and term deposit options in Australia. We also blog about valuable personal finance topics and general tips to help attain financial independence.
