Whether you happen to discover that you have been willed a considerable inheritance, won the jackpot of a multi-state lottery, happen to have gotten into the good graces of a charitable and moneyed individual or just managed to work the stock market in just the right way, chances are you are staring down an entirely new tax bracket. This article has been written with tips and advice on how to weather your new financial status, ensuring that you do not crash and burn up into debt like so many lottery winners.
Calculate Your New Tax Bracket
Any major influx of cash is likely to be something that can be tracked and traced. That means that the IRS is likely to be very interested in your new status. Once you know what your earnings will be, you should run the numbers combining your annual income and the influx and input the relevant statistics into a tax bracket calculator. Once you’ve input all of your statistics, you will know just how much of your influx you can actually enjoy spending and how much needs to sit on the bench to appease the government.
Be Cautious When Informing People
The expression “a fool and his money are soon parted” has been uttered for centuries with good reason. If you go about telling everyone that you hit it rich, people are going to treat you differently; you may gain a surge in popularity, but most of these newcomers to your circle of friends will leave the moment they sense that the chances of getting a free ride have disappeared. Conversely, people may come forward to demand you repay a real or perceived debt to them.
Be Mindful With How You Spend It
This tip overlaps a good deal with the previous point. Just because you do not actually proclaim your newfound wealth by your own words does not mean that people won’t be able to figure things out once they notice that you seem to have a brand new wardrobe, a new car, a servant, etc. Discretion of your spending may even go as far as disposing of large boxes, such as the sort common to exercise equipment and television sets, during times when your neighbors would not be likely to notice. The presence of large cardboard boxes bearing brand names or even just an Amazon logo may be just the nudge a would-be burglar needs to mark your home as a target.
Make a Detailed Wish List
While this tip is likely to be the most fun, it can also be one of the most thought-provoking. Itemize a list of all the things you want to spend your newfound money on. Once you’re satisfied with your list, organize the items in categories like “Things that need to be done,” “Things that would be nice to have.” After you have thoroughly gone sorted your list, you can focus on the necessities before moving on to the “fun stuff.”
Consider Going (Back) to School
Unless your country covers the basics of a college education, you need some combination of cash and scholarships to pursue higher learning. While a college education is something that every person should pursue if given the chance, and even if you happen to have an established career, it gives you the chance to meet new people, to broaden your horizons and to improve your resume. Even if you are well past the point of pursuing your education to get a better job, there’s nothing wrong with trying out a handful of classes that draw your interest.
In summary, a surge in spending money is always something to be cherished but you should take precautions to avoid being left out to dry when the monetary flood subsides. Do the math, or have an accountant do that math for you, to figure out just how much of your influx is actually yours to play with and then pare off the things you want to do with the things you need to do. These steps are a surefire way to wade your way through a massive spike in your personal pool of liquid assets.