Financial Planning: Sudden Windfall

Financial Planning: Sudden Windfall

November 06, 2019

As the leaves change color and the weather here in the Midwest gets progressively colder I'm reminded of the only certainty in life-Constant Change. 

One of my dear friends and clients reached out to me earlier this week and mentioned that her Company offered her a private tender offer that would result in a six figure windfall even after taxes were accounted for...This led to a thousand questions: Should I pay off my house? Should I buy a brand new home? Should I stash the money in a bank account? Invest it? Pay off student loans? Buy a new Jeep?

So we took a step back and focused on a values based approach to help make the right choice for where she was at in her life and what was most important to her and would bring her the greatest joy.

1. What are the top 5 most important things money could buy you to bring you more joy and fulfillment? 

I find we often get so wrapped up in the daily hustle, between running our business/working, being a good parent, being there for our spouse and other important relationships it's easy to lose track of what really makes us happy and what we want to create MORE of in our life. 

Think about what would give you the most joy....Paying off your home to be mortgage free and potentially retire earlier? Buying a bigger home to give your family more space to entertain? Investing the money to help you attain financial independence? Write down all the things that come to mind and assign a value ...1 being MOST important to you and most likely to bring you a great sense of happiness and continue down the list to the things that would only bring you short lived excitement.

As we did this exercise and discussed all the possibilities and how to allocate that money she was able to rank them in order and we modeled the different financial scenarios in WealthLink (financial planning software we use) to show her the net outcome towards her financial goals. Here they are in order of importance to her after discussing the pros and cons of each financial decision:

1. Retire as soon as possible to enjoy more family time, the outdoors, and volunteering in animal shelters. This involved choosing to invest a big portion of the windfall in order to attempt to grow the money for the day she'd need it to replace her paycheck.

2. Paying off the last few student loans left to simplify her finances further.

3. A small trip to Florida to treat herself and her parents for the holidays. 

Doing this exercise is a great way to review your current goals and self reflect as you change and go through the different seasons of life. As we go through different stages, from college graduates to home owners, parents etc., our priorities and values shift. It's a wonderful feeling to align the decisions you make around your money with your values and goals in life-only then can your money really help you live your most fulfilled life. 

If you want to find time to discuss your personal goals and how we coach clients to help plan for what's most important, schedule your complimentary, no obligation consultation here: Free Consultation


This is meant for educational purposes only and not meant to represent any other particular client situation or experience.  It should not be considered investment advice, nor does it constitute a recommendation to take a particular course of action. Please consult with a financial professional regarding your personal situation prior to making any financial related decisions.  11/19