Have you recently received a sizeable settlement after a car accident or other incident involving personal injury? A sudden influx of cash may feel like a blessing, but it may be another source of stress. You may not know what to do with the money in either case.
Consider Speaking with a Financial Advisor
It’s not often that someone hands you a substantial settlement payment. For those who have never received a large sum of money all at once, the excitement of the money and the emotions of the settlement can be a dangerous combination, leading to financial decisions that you may later regret.
The best thing you can do is to hire a financial adviser to help you make the best decisions for your situation. This prevents you from making rash decisions and enables you to effectively manage your finances.
Look Into Setting Aside Money for Taxes
Despite the fact that personal injury and physical illness settlements are typically not tax-deductible, a portion of your settlement award may be taxable. It is essential to know what you must pay, as failing to pay the correct tax on your settlement could land you in legal trouble. Before spending any of your settlement money, it is crucial to seek advice from a tax professional.
Pay Off Debt
Repayment of debt is an excellent use of settlement funds. For instance, paying off credit card debt, medical bills, and loans with high interest rates will improve your financial situation.
Create an Emergency Fund
Creating an emergency fund is an excellent way to prepare for unforeseen circumstances. To prepare for such circumstances and reduce the likelihood of incurring debt in the future, try to save enough money to cover your expenses for approximately six months.
Save for Retirement
Use this opportunity to begin saving money for the day when you retire. Your financial advisor can assist you in selecting the most suitable type of retirement fund for your circumstances.
If you intend to save money, you must also consider what type of estate planning you will need and how your remaining funds will be utilised after your death. A lawyer can advise you on how to organise your estate after your death.
If you have paid off your debts and saved a portion of your money, investing can be an excellent way to ensure a prosperous future. Investing allows you to put your money to work for you.
If you are not prepared to invest in another person’s business, you can invest in your home, your own business, and your education. Take pleasure in your ability to invest in things that are important to you. However, you may wish to consult your financial advisor to ensure the soundness of your plans.
Reward Yourself for What You Went Through
Lastly, set aside some funds for your own needs. Don’t forget to be prudent with your money; don’t waste it on regrettable purchases! However, never forget to have fun.
Consider taking that trip you’ve always wanted to take, purchasing that expensive purse you’ve been eyeing, or upgrading that car you’ve kept for ten years. You have overcome a difficult circumstance and deserve happiness.
Contact Our Personal Injury Law Firm
Contact Abrams Law Group for a free consultation if you’ve been hurt in an accident and require legal assistance.