By Jim Donovan
PHILADELPHIA (CBS) – The large Powerball jackpot is the kind of money most people only dream about, but managing any large sum of cash takes some hard reality.
You may not have won the Powerball, but that doesn’t mean a smaller, yet significant lottery win, an inheritance, or a legal settlement isn’t in your future.
Janet Bodnar of Kiplinger’s Personal Finance says the best approach to a windfall, is a practical one.
“You want to ask yourself the same questions you would ask yourself if you had never gotten this windfall. Do you want to beef up your retirement savings? Do you want to pay off debt? Do you want to save for college for your children? What is it that you want to do? And now perhaps you have the money to do that,” according to Bodnar.
Avoid making hasty decisions when emotions are still high. Parking that money in a savings account can give you time to find the right person to help you manage it.
“If you have somebody who’s trying to sell you a product right away, or to get you into an investment that you don’t know anything about, you want to avoid those people like the plague. You want people who are going to ask you questions [like] What are your goals? What do you want to do with this money?” Bodnar says.
Finally, be sure to get guidance from a tax specialist on what you might owe the IRS, even if the windfall seems small.