{"id":28538,"date":"2015-06-05T13:49:01","date_gmt":"2015-06-05T17:49:01","guid":{"rendered":"https:\/\/www.saratoga.com\/saratogabusinessjournal\/2015\/06\/business-report-managing-a-financial-windfall.html"},"modified":"2015-06-05T13:49:01","modified_gmt":"2015-06-05T17:49:01","slug":"business-report-managing-a-financial-windfall","status":"publish","type":"post","link":"https:\/\/www.saratoga.com\/saratogabusinessjournal\/2015\/06\/business-report-managing-a-financial-windfall\/","title":{"rendered":"Business Report: Managing A Financial Windfall"},"content":{"rendered":"\n<div class=\"img-left\">\n<div><img loading=\"lazy\" decoding=\"async\" alt=\"ruth mahoney column c.jpg\" src=\"https:\/\/www.saratoga.com\/saratogabusinessjournal\/wp-content\/uploads\/sites\/48\/2015\/06\/ruth20mahoney20column20c.jpg\" class=\"alignleft\" height=\"230\" width=\"150\">\n<\/div>\n<div class=\"img-caption\">Ruth Mahoney, president of KeyBank&#8217;s Capital Region.\n<\/div>\n<\/div>\n<p>BY RUTH MAHONEY<\/p>\n<p>People come into money in various ways,<br \/>\nfrom happy winnings to uncomfortable settlements.<\/p>\n<p>For visitors of the 147th Saratoga Meet<br \/>\nat the Saratoga Race Course, big money hopes<br \/>\nhinge on hitting the Pick 6 with a couple of<br \/>\nlong shots. You never know. It happens&#8211;even<br \/>\nif you pick your horses because you like their<br \/>\nname or color.<\/p>\n<p>In fact, on September 2, 2010, four ticket<br \/>\nholders selected the winners of each of the<br \/>\nPick 6 races and received payouts of $377,883.<\/p>\n<p>Regardless, whether your windfall comes<br \/>\nfrom a legal settlement, insurance claim, inheritance<br \/>\nor horse race winnings, the burden<br \/>\nof an unexpected lump sum of cash will likely<br \/>\nbe heavier than you realize. The reason: most<br \/>\npeople treat windfalls different than earned<br \/>\nmoney, and the resulting outcome too often<br \/>\nis a loss of wealth, strained relationships and<br \/>\nincreased financial and mental stress.<\/p>\n<p>The issue most people face when they come<br \/>\ninto money is they don&#8217;t know what do with it.<br \/>\nUnlike the income we earn, we don&#8217;t have a<br \/>\nplan for windfalls. It&#8217;s not part of our budget,<br \/>\nso it&#8217;s easy to think of it outside the scope<br \/>\nof our day-to-day expenses and long-term<br \/>\nfinancial goals. This is the mistake. When<br \/>\nnewfound money is not part of our plan, it&#8217;s<br \/>\neasy to spend. It&#8217;s also easy to overestimate<br \/>\nits true value.<\/p>\n<p>Press pause on the payout . . . and plan<br \/>\nThe best &#8220;first&#8221; thing you can do with a financial<br \/>\nwindfall is nothing. Exercise financial<br \/>\ndiscipline. Put the money into a savings account<br \/>\nor money market fund until you develop<br \/>\na plan for what you want to do with it. This will<br \/>\nallow you easy access to the funds if needed.<br \/>\nAnother option is to set up a short-term CD.<\/p>\n<p>The next thing you should do is assemble<br \/>\na financial team who can help you minimize<br \/>\ntax liability and coordinate the construction<br \/>\nof an investment portfolio that integrates with<br \/>\nyour short- and long-term financial goals. This<br \/>\nteam should consist of a certified financial<br \/>\nplanner, certified public accountant, estate<br \/>\nplanning attorney and an insurance professional. Their primary role is to help you make<br \/>\ninformed financial decisions. It is important<br \/>\nthat you take the time to interview your team<br \/>\nand be comfortable they are a fit. Remember,<br \/>\nthey will be working for you.<\/p>\n<p>While each individual situation is unique,<br \/>\nthere are some guidelines you should consider.<br \/>\nFive for fun. It is a windfall, after all, so<br \/>\nsplurge&#8211;but only a little. Limiting yourself<br \/>\nto spending less than 5 percent of your windfall<br \/>\nwill protect you from reckless financial<br \/>\ndecisions that can have serious long-term<br \/>\nramifications. Any niceties beyond that initial<br \/>\n5 percent should fit into your strategic<br \/>\nfinancial plan.<\/p>\n<p>Don&#8217;t check out. As strong as your desire<br \/>\nmay be to quit your job, carefully think it<br \/>\nthrough. Is the windfall really enough to<br \/>\nreplace the lost income, Social Security and<br \/>\npossible health benefits you&#8217;ll be walking<br \/>\naway from?<\/p>\n<p>Pay off debt prudently. It will be tempting<br \/>\nto use your windfall to pay off your mortgage<br \/>\nor your child&#8217;s student loan, but it shouldn&#8217;t<br \/>\nbe your priority. Your overall financial health<br \/>\nshould come first. Repayment of debt obligations,<br \/>\nincluding credit cards, should be<br \/>\naccounted for in your financial plan. Also,<br \/>\nbefore you start paying off your debt, set aside<br \/>\na six-month emergency fund.<\/p>\n<p>Prioritize long-term security. Define your<br \/>\nlife goals. Maybe you can&#8217;t call it a career,<br \/>\nbut perhaps you can be happier and make<br \/>\nmore money by changing careers. Investing<br \/>\nin more education could provide you with a<br \/>\ngood return. Also, goals establish benchmarks<br \/>\nfor evaluating the performance of your investment<br \/>\nportfolio. Looking ahead also helps you<br \/>\ndefine and mitigate risk based upon your<br \/>\ndesired outcomes.<\/p>\n<p>A helpful exercise you can undertake is to<br \/>\ncreate a spreadsheet of how you might like<br \/>\nto allocate your windfall. Include categories<br \/>\nsuch as retirement, long-term savings, shortterm<br \/>\nsavings, emergencies, fun, charities, etc.<\/p>\n<p>It&#8217;s a process that will help you think about<br \/>\nyour windfall more responsibly and will provide<br \/>\nyour financial team with a good overview<br \/>\nof your values and goals.<\/p>\n<p>Execute your plan. Financial windfall or not, the key to financial<br \/>\nsecurity is to develop a plan and execute<br \/>\nit. A financial windfall definitely presents you<br \/>\nwith more opportunities, but leveraging it for<br \/>\nfinancial independence is not without pitfalls<br \/>\nand does not provide a guaranteed outcome.<br \/>\nThat&#8217;s why it is important to work with your financial team to develop a plan you can live<br \/>\nwith. With their help, the decisions you make<br \/>\nregarding your career, retirement, real estate<br \/>\ntransactions, charitable giving and estate<br \/>\nplanning will be sound and informed.<\/p>\n<p>As you move forward through life, it&#8217;s<br \/>\nimportant to understand that your plan is<br \/>\nnot static. It needs to be a living, breathing<br \/>\nstrategy that evolves as you grow. It also needs<br \/>\nto adapt with and adjust to the demands of<br \/>\nfuture market conditions. Your financial team<br \/>\nshould meet with you at least annually to ensure your goals are still being met.<\/p>\n<p>At the end of the day, a financial windfall<br \/>\nis a blessing. Whether it&#8217;s $10,000, $500,000<br \/>\nor $10 million, it should not be the curse that<br \/>\ntoo often it becomes. It&#8217;s an opportunity, and<br \/>\nproper planning&#8211;aided by a skilled financial<br \/>\nteam&#8211;can help you leverage the opportunity<br \/>\ninto something that improves the overall wellbeing<br \/>\nof you, those you love and even the<br \/>\ncauses you care most about.<\/p>\n<p>Mahoney is president of Key&#8217;s Capital<br \/>\nRegion.<\/p>\n<p>Photo Courtesy KeyBank<\/p>\n","protected":false},"excerpt":{"rendered":"<p> Ruth Mahoney, president of KeyBank&#8217;s Capital Region.BY RUTH MAHONEY People come into money in various ways, from happy winnings to uncomfortable settlements. For visitors of the 147th Saratoga Meet at the Saratoga Race Course, big money hopes hinge on&#8230;<\/p>\n","protected":false},"author":121,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[9],"tags":[58,70],"class_list":["post-28538","post","type-post","status-publish","format-standard","hentry","category-business-reports","tag-business-reports","tag-financial"],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v26.6 - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\r\n<title>Business Report: Managing A Financial Windfall - Saratoga Business Journal<\/title>\r\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\r\n<link rel=\"canonical\" href=\"https:\/\/www.saratoga.com\/saratogabusinessjournal\/2015\/06\/business-report-managing-a-financial-windfall\/\" \/>\r\n<meta property=\"og:locale\" content=\"en_US\" \/>\r\n<meta property=\"og:type\" content=\"article\" \/>\r\n<meta property=\"og:title\" content=\"Business Report: Managing A Financial Windfall - Saratoga Business Journal\" \/>\r\n<meta property=\"og:description\" content=\"Ruth Mahoney, president of KeyBank&#039;s Capital Region.BY RUTH MAHONEY People come into money in various ways, from happy winnings to uncomfortable settlements. 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