What To Do With A Lump Sum Amount
Disclaimer: These Are My Opinions on what I would do if I was given a lump sum of money. I'm not trying to advise any one on how and what they should spend their money on but I think these tips are helpful if you need some direction on what to do with a lump sum amount.
First and foremost you want to be careful on making grand purchases without sitting down with your significant other or creating a spending plan and a budget. Most people make the mistake of spending lavishly and buying things they want instead of taking care of their needs and the things that are important. Personally before I make any new purchases or commit to anything financially I assess my current financial situation and I discuss things over with my spouse to ensure that I'm making the best decision. Money is an important factor in our lives and with the right money management one can get out of debt, start a business, retire early or maybe enjoy more free time to do tbe things they want to do. I will share some helpful tips on what to do with a lump sum amount.
What is a lump sum? A lump sum payment is an amount paid all at once as opposed to an amount that is divided up and paid in installments. Examples of a lump sum is back pay on child support, Income Tax, Earned Child Income Credit, 401K, Winnings, Legal Settlements and Bonuses from your employer.
One of the first things you want to do with a lump sum is pay off your past bills and other debt. The goal is to obtain the things that you need to live and to operate successfully on a daily basis such as a mortgage, car payment, childcare, life insurance, and health insurance and other expenses. Another thing I like to do with a lump sum amount and is important to me is to pay tithes and offering to a church. I'm a believer of the Bible that if you give ten percent of your earnings God will multiply your resources.
Fix any maintenance issues that you have in your home or your car. This is the time that you can do repairs before the issue gets worse. Home and car repair can become very expensive, that's why you want to stay ahead and tackle anything even if the issue is minor.
Open up an account for emergency savings. An emergency seems to arise when you least expecting it and without warning. In order to overcome an emergency you must be prepared mentally and financially. One way of being prepared financially is to put 10 or 15 percent of your earnings into a savings account. The extra money from your lump sum is a great way to jump start your savings especially if you didn't get a chance to save money prior to the lump sum amount.
Lastly you want to invest or start your own business to gain more financial freedom. Having residual income can help relieve debt and you can have more free time to do some of the things you want to do in life. Who don't want freedom? If you prioritize and use your money wisely you will be on your way to financial freedom and you can help others to do the same. I hope these tips were helpful, I definitely will be applying these strategies when I receive my lump sum. I recorded a bonus video that I would like for you to watch. Please like and subscribe to my YouTube Channel Bloggingwithapril. Please follow me on Instagram and Twitter Bloggingwithapril.
Thanks for stopping by, please feel free to leave a comment or suggestion on what to do with a lump sum amount. Please check out my other stories on this site. Until next time spend wisely.