What would you do if you won a lottery?
A. Go on a foreign trip
B. Buy the most expensive iPhone
C. Buy your dream car
X. Pay off your debts
Y. Strengthen your emergency fund
If you have already taken care of X, Y, and Z before even having received any sudden windfall of money, then congratulations, you’re a financially-smart individual, and you can do whatever you think is right in this moment of financial happiness. However, if you haven’t and you still think you should go with A, B, or C, then hold on! This might be your worst financial decision ever.
There have been instances in the past where people who were blessed with a sudden windfall of money couldn’t think things through and ended up losing it all. At times like this, it is required of you to not take any decision based on stress or emotion. It is natural to feel tempted to satisfy an instant gratification, but channelizing your resources towards making your life financially stable first is what you need to do at this point of time in life.
So, what are the best ways to put a sudden lump sum of money to use?
Being debt-free is a great stress reliever. If you have any debts—big or small—pay them off right away. You might have borrowed a loan on which you may still be paying high interest. Use this lump sum money to pay off that loan. Pay off your credit card debt as well if you have any.
Finance Your Business
Ever had plans of setting up your own food joint? This is probably the best time to turn your long-standing entrepreneurial dream into reality. Conduct thorough research, consult experts, take feedback from family and friends, prepare a roadmap, and start funding your own start-up!
Create an Emergency Fund
Medical and similar other emergencies can create some financial stress in the absence of an emergency fund. This has to be taken care of. For example, by subscribing to a health insurance plan, you can rest assured that you and your family would receive timely and effective medical treatment whenever required.
Invest in Long-term Financial Instruments
As a married Indian, you might have these long-term financial goals to fulfill:
- Sending your kid to the best possible school or college
- Going on a foreign family vacation
- Retiring with financial independence
These are some compelling financial goals that should push you to channelize your money into schemes that promise only the best. And when someone mentions “best”, we always suggest money-back and ULIP plans, which, in addition to offering high returns on investments, provide a financial blanket by covering the individual against the uncertainties of life, such as death and disability.
You might like to read: 5 Reasons Why ULIPs are Superior to Mutual Funds
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