Koh advises that when you find out you’re coming into money – be it large or small, and from an inheritance, selling a business, or otherwise – the first thing you should do is: nothing. “Because usually people have a very emotional reaction to a windfall, and that can range from fear and anxiety … right through to a state of euphoria where people maybe do some crazy things. You just need time to work through those feelings before you can make rational, logical decisions.”
She says seeking advice is crucial, but so is choosing the right person to provide it. “The big dilemma for a lot of people is who can I trust? Everyone will have ideas about what you can do with your money. It’s really important to speak to somebody that is legally able to give you good, sound financial advice.”
Koh suggests there should be an order of priorities to how you spend the money. “Clear all your debts first – that’s the most sensible thing to do. Then make sure you’ve got what we call an emergency fund, and only then start thinking about long-term investing.”
The expectations of others can also weigh heavily on those who have received a windfall, which can result in significant sums being frittered away. Koh says: “You can’t continue to help people if you don’t maintain your own financial stability, so that has to come first.”
Listen to the full episode of The Prosperity Project for more from Liz Koh.
The podcast is hosted by Nadine Higgins, an experienced broadcaster and a financial adviser at Enable Me.
You can follow the podcast at iHeartRadio, Apple Podcasts, Spotify, or wherever you get your podcasts. New episodes are released every Monday.
