{"id":17110,"date":"2015-06-18T12:13:52","date_gmt":"2015-06-18T16:13:52","guid":{"rendered":"https:\/\/www.glensfalls.com\/glensfallsbusinessjournal\/2015\/06\/business-report-managing-a-financial-windfall.html"},"modified":"2015-06-18T12:13:52","modified_gmt":"2015-06-18T16:13:52","slug":"business-report-managing-a-financial-windfall","status":"publish","type":"post","link":"https:\/\/www.glensfalls.com\/glensfallsbusinessjournal\/2015\/06\/business-report-managing-a-financial-windfall\/","title":{"rendered":"Business Report: Managing A Financial Windfall"},"content":{"rendered":"<div class=\"img-left\">\n<div>\n<img loading=\"lazy\" decoding=\"async\" alt=\"ruth mahoney column c.jpg\" src=\"https:\/\/www.glensfalls.com\/glensfallsbusinessjournal\/wp-content\/uploads\/sites\/109\/2015\/06\/ruth20mahoney20column20c.jpg\" class=\"aligncenter\" width=\"150\" height=\"230\">\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. 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.<br \/>\nThe 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, so<br \/>\nit&#8217;s easy to think of it outside the scope of our<br \/>\nday-to-day expenses and long-term financial<br \/>\ngoals. This is the mistake. When newfound<br \/>\nmoney is not part of our plan, it&#8217;s easy to spend.<br \/>\nIt&#8217;s also easy to overestimate its 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 a<br \/>\nfinancial team who can help you minimize tax<br \/>\nliability and coordinate the construction of an<br \/>\ninvestment portfolio that integrates with your<br \/>\nshort- and long-term financial goals. This team<br \/>\nshould consist of a certified financial planner,<br \/>\ncertified public accountant, estate planning<br \/>\nattorney and an insurance professional. Their<br \/>\nprimary role is to help you make informed<br \/>\nfinancial decisions. It is important that you<br \/>\ntake the time to interview your team and be<br \/>\ncomfortable they are a fit. Remember, they will<br \/>\nbe working for you.<\/p>\n<p>While each individual situation is unique,<br \/>\nthere are some guidelines you should consider.<\/p>\n<p>Five for fun. It is a windfall, after all, so<br \/>\nsplurge&#8211;but only a little. Limiting yourself to<br \/>\nspending less than 5 percent of your windfall<br \/>\nwill protect you from reckless financial decisions<br \/>\nthat can have serious long-term ramifications.<br \/>\nAny niceties beyond that initial 5 percent<br \/>\nshould fit into your strategic financial plan.<\/p>\n<p>Don&#8217;t check out. As strong as your desire may<br \/>\nbe to quit your job, carefully think it through.<br \/>\nIs the windfall really enough to replace the lost<br \/>\nincome, Social Security and possible health<br \/>\nbenefits you&#8217;ll be walking away 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, but<br \/>\nperhaps you can be happier and make more<br \/>\nmoney by changing careers. Investing in more<br \/>\neducation could provide you with a good return.<br \/>\nAlso, goals establish benchmarks for evaluating<br \/>\nthe performance of your investment portfolio.<br \/>\nLooking ahead also helps you define and mitigate<br \/>\nrisk based upon your desired outcomes.<\/p>\n<p>A helpful exercise you can undertake is to<br \/>\ncreate a spreadsheet of how you might like to<br \/>\nallocate your windfall. Include categories such<br \/>\nas retirement, long-term savings, short-term<br \/>\nsavings, emergencies, fun, charities, etc. It&#8217;s<br \/>\na process that will help you think about your<br \/>\nwindfall more responsibly and will provide your<br \/>\nfinancial team with a good overview of your<br \/>\nvalues and goals.<\/p>\n<p>Execute your plan<br \/>\nFinancial 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<br \/>\nfinancial 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 planning<br \/>\nwill be sound and informed.<\/p>\n<p>As you move forward through life, it&#8217;s important to understand that your plan is not static.<br \/>\nIt needs to be a living, breathing strategy that<br \/>\nevolves as you grow. It also needs to adapt with<br \/>\nand adjust to the demands of future market<br \/>\nconditions. Your financial team should meet<br \/>\nwith you at least annually to ensure your goals<br \/>\nare 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 causes<br \/>\nyou care most about.<\/p>\n<p>Mahoney is president of KeyBank&#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&#8230;<\/p>\n","protected":false},"author":88,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[9],"tags":[67,84],"class_list":["post-17110","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 - Glens Falls 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.glensfalls.com\/glensfallsbusinessjournal\/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 - Glens Falls 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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