Are you planning to receive a large sum of money from a tax refund, inheritance, or work bonus? If so, it is best to plan ahead of time how you are going to use the money. If you do not plan ahead, you may find that you spend this large windfall of money and then you are back in the same financial position you were before you received the money. Here are some great ideas for spending all, or a portion, of the money you receive.
Pay Off Debt
One of the most important things you can do with your money is to pay off any outstanding debt. This may include your credit cards, back bills, personal loans, or your mortgage. This will help you save money by reducing the overall amount of interest you owe on the debt. In addition, it can help to lower your monthly payments making it more managemable for you throughout the year.
High Interest Savings Account
Saving all, or a portion, of your money is a great idea. This will make additional funds available to you if you ever face an emergency. If you choose to save back some of the money, be sure to put it in a high interest savings account. This will earn you the highest amount of interest over time. Some of these accounts require a minimum balance to be kept in the account at all time, so be sure to follow these guidelines to avoid extra banking fees.
You may also want to spend some of your money on making financial investments. It is best to sit down with an investment broker who can help you determine what type of investments would work best for you. He/she can help you set investment goals and build your investment portfolio. When finding an investment specialist to work with you, be sure that he/she is licensed by the Australian government to provide investment service. You can check the ASIC Connect’s Professional Register to be sure he/she is properly licensed.
Extra Super Payments
Another alternative is to put some of your money into your superannuation account. This will ensure that you do not spend the money and make it available to you upon retirement. If you are eligible, the government will match any payments made to your super up to $500. This Super Co-contribution option is available to low-to-middle income families and offers a great way to grow your retirement fund.
You should also see a financial counsellor to help you determine the best way to spend your money. A financial counsellor can explain all of your options to you and help you determine which option would be best for your specific situation. He/she can help you set long-term and short-term financial goals. If at all possible, you should meet with your counsellor even before you actually receive the money. This will help to make sure you do not spend a large part of the money before making financial plans.
Give Back – Charity
Depending on your current situation you may want to help others with a percentage of your unexpected windfall. Beyond the great feeling of helping others, there are also different tax benefits in helping others. For specific tax advice, consult your Accountant and/or Financial Adviser.