Don't count on a windfall.
You should not plan on receiving an inheritance, windfall, or lottery at all. Money isn't yours until it is yours. They can also be spent, wasted, or donated to charity before the money gets to you. Do not spend money you do not have.
Do these things if you receive a large windfall:
1. DO NOT TELL ANYONE.
Well, you can tell your spouse and any financial advisors (e.g., your CPA if you have one), but it's best to not share with other family, friends, or anyone else, especially for a larger windfall.
2. Get educated on saving and investing.
Read and digest the wiki article "How to handle $".
One note: If spending $X of your windfall will let you save an additional $X into your IRA, 401(k), or other employer-sponsored account by making up for the decrease in your take-home pay, that's a good use of money since it is essentially allowing you to move money from a taxable account into a tax-advantaged account.
Read The Bogleheads managing a windfall article. It's a good resource for how to handle large inheritances or other windfalls.
Read several books from the reading list.
For larger windfalls, consider reading one of these books:
- Sudden Money: Managing a Financial Windfall by Susan Bradley and Mary Martin
- Sudden Wealth: Blessing or Burden? by David Rust
- Windfall: Managing Unexpected Money So It Doesn't Manage You by Maria Brill
- The Windfall Club: What to do When Life Deals You a Good Hand by Janne Ashton
- The Challenges of Wealth by Amy Domini (out of print and a little dated, but can be borrowed online for 14 days)
3. Don't screw up.
- Be careful about who you tell, especially for large windfalls.
- Take your time making a plan.
- Learn how to invest your own money, lower your costs, etc. (see above).
- Don't burn through your money (buying cars, living an expensive lifestyle, housing you can't afford longer-term, risky investments, gifts, etc.). Fund those things as a part of your regular income and budget, not from the windfall.
- If you have income, use the extra money to boost your 401(k) and IRA savings.
- "You just won the lottery. A gentleman's guide for handling the money that you didn't earn nor deserve." (linked with permission from the author)
- /u/BlakeClass commments on "you just won the lottery"
Related PersonalFinance Question threads
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revision by dequeuedWiki Contributor— view source