A sudden windfall can be life changing…especially if you use the money wisely.
There can't be too many of us that haven't drifted off, blissfully imagining what it would be like to win the lottery. So much money…so many possibilities.
Sadly, the odds of winning something like Oz Lotto can be as high as one in 45 million. So it doesn't pay to peg your hopes of personal wealth on a weekly ticket.
But here's the thing. Plenty of Australians will receive a valuable windfall through an inheritance or even divorce.
The question is, how would you spend an unexpected windfall of, say, $50,000?
How not to spend a windfall
Before drawing up your hypothetical bucket list, let's look at what not to do. The most important step is to simply sit tight for a while. Avoid rushing out and squandering the cash on a wild ride of retail therapy. It's what plenty of big lottery winners do, and while it may be fun at the time, it proves to be a serious mistake for many.
Research in the US by the Vanderbilt University Law School found lottery winners declare bankruptcy at twice the rate of the general population. Apparently it's all related to the way we tend to place less value on money we've come into by chance compared to money we've had to work hard for. Makes sense. It's a bit like the way we find $5 on the pavement and treat ourselves to a chocolate bar.
Stop, think, plan
Back to that $50,000. A key step with any windfall is to seek expert advice about the best way to use the money.
If you're a home owner for instance, your local Mortgage Choice broker can crunch the numbers to show how much you could save by tipping a $50,000 windfall into your home loan. Sure it may not sound as thrilling as hiring a yacht to sail The Whitsundays but you may change your mind when you see the savings on interest charges. Plus you'll be mortgage-free a whole lot sooner. Now that's exciting. Check out our Lump Sum Payments calculator for a quick idea of the savings you could enjoy.
Give your home a makeover
Maybe you'd prefer to use the money to spruce your home up. Fifty thousand dollars would buy a fabulous new kitchen - with enough spare change to give the bathroom a facelift too. It's a smart way to use your windfall, giving both your lifestyle and your home's value an impressive uptick.
Or, you could spend the money on your upcoming wedding. Already married? How about a lets-do-it-again-only-better second wedding. With $50,000 in the kitty you could hire your own personal chef to cater for guests. Heck, you could probably buy the restaurant.
Here's a thought. How about using a $50,000 windfall as down payment on an investment property. Now that could really supersize the long term value of your money.
The fact is, any sudden change in your financial position can significantly shape your future, and it doesn't have to be a big windfall to make a valuable difference. For professional help deciding how to make better use of your money, call 13 77 62 to book your appointment with a Mortgage Choice expert. Or click here to fill out an enquiry form and we'll be in touch shortly.