Yahoo Finance 3 Things You Should NOT Do When You Get a Windfall
Judging by the number of people praying for Toto and 4D numbers at temples all over Singapore, a lot of people here are hoping for some windfall luck, as the Chinese call it. Sure, toiling away for decades to give your family a secure future is respectable and all, but nothing beats a good old lottery win, a killer en bloc sale or all your stocks rising in value at the same time.
However, we’ve all heard horror stories of that guy who won $1 million at Toto and spent it within a year. Don’t let that happen to you. Here are three things you should absolutely not do if you’re lucky enough to experience a windfall:
1. Don’t tell your friends
No matter how trusting you are or what wonderful people you think your friends are, trust us on this—don’t go and update your Facebook status about the wonderful news just yet. If you tell all and sundry about your windfall, you are inviting unwanted solicitations from friends who need to borrow cash so they can spray-paint flames on their cars, those who are looking for some poor sucker to open bottles for them at the club and those who are truly in need and desperate.
In addition, when you receive a windfall, unless it’s big enough to change your life permanently, you want to avoid altering your lifestyle. This gets difficult when the people around you start treating you differently—colleagues might persuade you to start having lunch at more expensive places and your friends might urge you to just live a little and buy that new car. To avoid such pressure, it’s best to keep mum.
2. Do not upgrade your lifestyle
It’s okay to treat yourself a little with a small part of the pile of money you’ve won. But make sure that whatever luxuries you allow yourself do not affect your lifestyle on the whole. It is true that with a big enough windfall it’s not impossible make changes to your financial situation that will enable you to live more comfortably for the rest of your life. But unless such changes have actually been made, do not upgrade your lifestyle. Once the money has been used up, it’s going to be painful trying to downgrade. And as we all know, lifestyle inflation in Singapore can keep you really poor.
That means that it’s okay to treat yourself to a designer handbag if the cost doesn’t make you balk. But renting a condo unit at Orchard Road, signing up for a country club membership and buying a sports car are all no-nos unless you’re sure you can sustain this lifestyle even after the money has run out.
3. Do not forget to channel the money towards improving your financial situation
When many people think of windfalls, they imagine themselves drenched in champagne and caviar, supermodels fawning over them. But the unsexy reality is that a windfall is only useful when it helps you to improve your financial situation. That means your 4D winnings can help you go from being someone who’s drowning in debt to someone who’s debt-free. The money you made from selling your property can help you buy a bigger, better investment property. If you’ve never been able to build an emergency fund, that big ang bao from the wealthy benefactress can help.
And finally, if you’ve got money left over, the smart thing to do is to add it to your investment portfolio. That way, the money you’ve won won’t go down the drain but will instead grow over the years. If you’ve not been investing thus far and don’t know where to start, follow us on Facebook for more tips on how you can grow your money without having to wait for a windfall!
Have you ever had a windfall? Tell us what you did with it in the comments!
The post 3 Things You Should NOT Do When You Get a Windfall appeared first on the MoneySmart blog.
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