馃攳
What To Do With A Financial Windfall - YouTube
Channel: Ann Wilson | The Wealth Chef
[0]
- What to do with a windfall,
[3]
yes, a big juicy inflow of money.
[6]
Now you might go, well,
Ann, hey, quality problem.
[9]
Well, for many people it's
not a quality problem.
[11]
It's a real problem,
[13]
because most people actually have no idea
[15]
how to handle a big inflow of money.
[17]
But not just even a big inflow,
[19]
it might be a smaller inflow.
[20]
Maybe it's a year-end bonus at work.
[23]
Maybe you've got a tax refund.
[27]
Maybe you got a nice raise.
[30]
Maybe you inherited some money,
[31]
so that could be some bigger chunks.
[33]
Maybe you got a divorce settlement
[35]
or a life insurance payment.
[37]
Maybe you've been working on a side gig,
[39]
and you've got some
additional money coming in.
[41]
So, it can be a whole range
[43]
of this additional money coming in.
[45]
And for many people, without
actually having a strategy
[48]
or plan to how to deal with inflows,
[50]
two big, bad things happen.
[52]
One, it just flows
straight out of their life,
[55]
because if they've got a dodgy
or dysfunctional money flow,
[59]
all of that additional inflow will do
[60]
is magnify that money flow.
[62]
Now, if you don't know about money flows
[64]
and whether you've got a
dysfunctional one or not,
[66]
go and watch that video.
[69]
But so, what happens, that
dysfunctional money flow
[72]
just gets magnified by
the increase of money,
[74]
and then when that windfall is dried up,
[77]
when it's no longer flowing in,
[78]
they actually ended up with a wider
[81]
or bigger dysfunctional money flow.
[84]
So, it's like a river comes in.
[86]
There's a big flood happens,
boff, it bursts the river banks
[90]
and then it all dries
up and now you're left
[92]
with just bigger river banks.
[93]
And this is one of the
reasons why most people
[96]
who get a big windfall,
a divorce settlement,
[99]
an inheritance, a lottery
win, maybe some kind of payout
[104]
from an insurance, it
could be from an accident,
[107]
actually end up in a
worse financial position
[110]
within two years from when
they got that windfall.
[113]
It's also one of the reasons
[114]
that over 94% of all big earners
[118]
in the sport and entertainment area,
[121]
musicians, movie stars,
[124]
big sports stars that get a lot of money
[127]
for a short period of time
[129]
end up in really, really
bad financial positions,
[132]
because they've never been
taught what to do with it.
[134]
But, maybe your windfall
is that tax rebate.
[138]
You want to have a strategy.
[139]
So, what do you do with it?
[141]
The most important thing to
do when you have any kind
[143]
of bigger chunk of money flow
[145]
into your life is neutralise it.
[148]
Because here's the thing.
[149]
As humans, we treat money
[151]
from different sources differently.
[153]
We have one mindset or
behaviour around money
[156]
that we've earned that we've worked for.
[158]
You can go, oh, my hard-earned money.
[160]
And so, most people have some kind of way
[163]
that they manage that money.
[164]
But windfalls, people often
go, oh, you know, free money.
[168]
Oh well, it's cheap, it came in.
[170]
And so, often people will treat it
[171]
with a lower value, it's potential.
[173]
Hence, why it makes it
so easy to flow out.
[176]
People say, oh well, you
know, I didn't work for it,
[179]
so let's go on that
holiday or buy more things
[183]
or get that car or whatever it is.
[185]
They'll treat that money differently.
[186]
So, your very first step is
to neutralise this energy,
[190]
the beliefs we have around
the meaning of that money.
[194]
Because all money is equal,
[195]
but we create different
weird identities around money
[199]
from different sources.
[200]
So, how do you do that?
[201]
Everybody should have what
I call your reservoir,
[204]
your dam account.
[206]
This is also really important
[208]
as you start getting more
asset-generated income,
[211]
that you have an account where
all money sources flow into,
[215]
and this should not be your
day-to-day transaction account,
[218]
because it's not about spending it.
[219]
This is a catchall account
[221]
where investment property income
comes in, dividend income,
[225]
your other passive businesses
and windfall goes in.
[228]
So, it can all neutralise.
[230]
It can spend a little bit
of time in that big dam,
[233]
and it can blend with money
from the other money sources
[236]
and your actively-earned
income should come in there,
[238]
so it ends up all just being money,
[241]
not free money, earned
money, investment money,
[244]
which we can have different behaviours.
[245]
Money is money.
[247]
Now, you then need to have
a money management system,
[251]
something like wealth pie, about
how to allocate that money.
[255]
So, let me give you a refresher.
[257]
So, key things with a
windfall that you want to do.
[259]
The very, very first thing
that you want is increase,
[263]
a big lump of that needs
to go to your freedom,
[266]
and the more of that money
[267]
that you can put to freedom, the better.
[270]
This is to your investments, to assets.
[272]
Remember, if you create assets,
[275]
those assets end up working
for you over and over
[278]
and over again, as opposed
to just spending that money,
[281]
because once you've spent it, it is gone.
[282]
Whereas if you convert it into assets,
[284]
it'll keep earning for you over and over.
[287]
So, you want a minimum, a
minimum of 10% of that windfall
[291]
to go to investments.
[292]
Now, if it's a big, sizeable windfall,
[294]
or if it's something like an inheritance,
[297]
a death benefit, a divorce settlement,
[300]
you want 90% of that going to assets,
[303]
because that money is
designed to look after you.
[306]
But in the interim, I'm talking
about maybe a tax rebate.
[309]
Now, we're gonna come
to the more dividing up.
[312]
So, pay yourself first.
[314]
Pay your freedom first,
is where that first chunk
[316]
of money needs to go.
[317]
And you can look at your
tax-efficient mechanisms.
[320]
Have you utilised your
tax-protected investment parts?
[325]
Your ISA allowance, your Roth allowance,
[327]
your tax-free savings account allowances.
[330]
Make sure you top those up first.
[331]
Have you fully utilised your
retirement funding allowance
[335]
for that year?
[336]
Are you in a country where you can go back
[337]
and utilise previous years' allowances?
[340]
So, top those up, because
that enables your investments
[344]
to grow free of tax and be
more efficient as you go.
[347]
So, pay yourself first.
[349]
Buy investments with a
large chunk of that money.
[352]
The next thing to do is pay
down and clear consumer debt.
[357]
That is that contraction debt.
[359]
This is not neutral debts, not
your mortgage on your house,
[362]
and it's not expansion debt.
[364]
This is not debt that
you've taken on to control
[367]
and buy assets like
investment property debt
[369]
or gearing in businesses.
[371]
This is straight consumer
debt, credit cards,
[374]
overdrafts, store cards, your car loan,
[378]
student loans, IOUs,
[382]
short payday lenders,
[384]
all of that hideous stuff
where you're paying interest
[386]
on that money that's just
without something against it,
[389]
get rid of that.
[391]
And remember that every bit
[393]
of debt you pay is
actually a wealth strategy,
[396]
because it increases your net worth.
[398]
And remember, your net
worth is your guiding star.
[401]
That's what you're focusing
on is building your net worth
[404]
to get to your freedom number,
[405]
so that you don't have to
work if you don't want to,
[408]
because your assets
are doing all the work.
[411]
So, that's really key.
[412]
Create assets, blitz your debt.
[414]
Both of them are going to
increase your net worth.
[417]
Now, the next thing is build
up your cash safety net
[421]
and for your emergency fund
[422]
if you don't have that already in place.
[424]
Emergency funds, so go and watch the video
[426]
on what does that mean,
[427]
getting that protection pate in place.
[430]
This amount of money that is to serve you
[433]
for things that are expensive
coming down the line,
[435]
but also for emergencies, and
money that you can feed off
[440]
in an interim period of time,
[442]
so you can allow your assets to grow.
[443]
We're starting to get
into draw down strategy,
[445]
but you always want a chunk of money
[449]
that you can live off, if
you're not earning actively,
[452]
but also as part of your intention
[454]
that you'll then feed off a cash element
[457]
when you're actually drawing down
[459]
and feeding off your feast.
[460]
So, build up your cash safety
net and your emergency fund,
[463]
really important.
[465]
Then the fourth aspect,
allow yourself to indulge,
[469]
have some fun, celebrate
some of that money
[472]
but not all of it.
[473]
Don't blow it, but I'm
also not gonna be the ooh,
[475]
you can't have fun.
[476]
As you know if wealth pie,
you need to be having fun
[479]
with your money.
[480]
If you're not doing that,
something else will happen.
[484]
It will blow up in a
big, messy money drama.
[486]
We need to be satiating our desires,
[490]
having joy, celebrating life,
[492]
but that's the key thing,
make sure you're spending it
[495]
on things that you really enjoy.
[497]
So, indulge, have fun and
really get value from that
[500]
rather than just some unconscious,
[502]
like how quickly can I
get rid of the money.
[505]
Allocate some of that to really things
[507]
that you want to do.
[509]
And then, fifth element
is allocate some of that
[512]
to your growth.
[514]
Think about, what is
an area that you can go
[517]
and get some more education in,
[518]
some more knowledge you can gain.
[520]
Is there a course you need to do?
[521]
Or want to do?
[523]
Is there a teacher you want to work with?
[526]
Is it something that can increase
[528]
your earning potential actively?
[530]
So, maybe you're an amazing photographer,
[531]
but you want to get that next distinction
[535]
on how to get even more
extraordinary photographs,
[537]
so you can put more onto passive earning
[540]
and earn more royalties
off your photographs.
[543]
Do you wanna learn how to
invest in another asset class?
[545]
Do you need to get a property mentor
[547]
or learn how to do rent to rent?
[549]
What about investing in the stock market?
[552]
Can you increase your skills
[554]
or do you want to start
on online business?
[556]
Do you need to learn how to market that?
[558]
And so, allocate some
money for your growth.
[562]
So, there you go.
[563]
Key thins with your windfall.
[564]
Most important, neutralise it.
[567]
Secondly, determine
whether it's a big lump sum
[570]
that's been designed for you to live off
[571]
and feed off for a long time.
[573]
If that's the case, you get
it invested and working.
[576]
If it's a smaller inflow,
like some lottery win,
[580]
not that I'm a big
proponent of that at all.
[583]
In fact, I think the lottery is hideous,
[586]
but if it's a tax rebate or
an extra bonus that come in,
[589]
look at these different five areas.
[591]
Freedom first, saving,
paying down consumer debt,
[596]
allowing yourself to
indulge and have some fun
[598]
and allocate some to keep growing you.
[601]
So, there you have it.
[603]
I'm Ann Wilson and I'd love to know
[605]
in the comments below, what
have you done in the past
[609]
with a inflow?
[612]
Have you had a strategy?
[613]
And now, having a strategy,
[615]
what difference will that make
in your life going forward?
[618]
And please share in as much detail,
[620]
any ahas that you got from this video,
[622]
because that will also really help others
[625]
that come here who are also looking
[627]
at growing their financial freedom
[630]
and financial savviness and
their relationship with money,
[633]
so they too can get to
live their greatest life.
[636]
And remember, your
freedom is always created
[639]
just by one step at a time,
so keep taking those steps.
[642]
Until next time, keep living
that rich, juicy life.
[645]
(logo thuds)
Most Recent Videos:
You can go back to the homepage right here: Homepage