When you find out that you’ll be getting cash for structured settlements, your mind may quickly wander to the many ways you could spend all of that money: You could buy a fancy new car, buy your significant other something pretty, or go on an expensive cruise!
But then, reality sets in. You have bills to pay and a life to lead. If you’re the recipient of a substantial structured settlement agreement, here are the first practical steps you should take to manage your new financial situation.
- Understand how it will impact your taxes.
Boring? Yes. Important? Incredibly so. Depending on the nature of your case settlement, your reward could be subject to income taxes. The first thing you should do is hire an accountant to explain your options.
- Pay off your debt.
Whether you have medical bills or school loans, the best way to provide a better financial future for yourself is to pay off that debt as quickly as you can to avoid accruing interest. An average household spends $6,658 on interest payments every year, so it’s worth your while to shave off debt with that money burning a hole in your pocket.
There’s the old saying, “You have to spend money to make money.” Getting cash for structured settlements could be your ticket to a whole new future, so long as you know how to do it. Invest in education. Invest in launching a new company. Be smart about where and how you spend your money.
Making a donation to a charity is a way to give back to the community and spread your newfound wealth. Remember that for every annuity settlement won, there are plenty of other people who weren’t as fortunate. Do what you can to help others in need and feel free to give yourself a pat on the back while doing it!
If you manage your money wisely, there will be plenty of opportunities throughout your life to treat yourself to small indulgences. Rather than spending all of your settlement money the moment it hits your bank account, think twice about how that cash can be spent for something bigger or better than a wild night on the town — something like your own future.