What To Do With a Large Sum Of Money (And What Not To Do!)

What To Do With a Large Sum Of Money(And What Not To Do!)

What would you do if you won the lottery? Or let’s say you get a large sum of money from a bonus or a tax refund -you may be asking yourself, “what to do with a large sum of money?”

Will you spend it all on a big house? Are you going to swim in a pool filled with cash (spoiler alert, the pool doesn’t really fill up)?

 Before you decide what to do with a large sum of money, have a quick read of this article and find out what you should do with your newly found wealth, what not to do, and where you can safely store your money. 


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What To Do With A Large Sum Of Money?

Before I advise you on what to do with a large sum of money, I thought it would be wise to give you some tips.

 Did you know that lottery winners are more likely to declare bankruptcy within three to five years than the average person?

The first tip I have for you if you come into a large sum of money is: 

1.Pause and Wait Before Making A Decision

Take a breather and pause before you make any rash decisions with that money.

If you win big at Vegas, receive a large inheritance, win the lottery or get a huge tax return, don’t run off with the money and spend it all on one thing.

Press pause and wait before you make a financial decision -the winnings can go to your head and your imagination might be running wild scenarios of lavish purchases or an extravagant lifestyle but reign it in my friend.

Financial experts suggest waiting a minimum of six months or even two years before making any decision. 

(Ok personally – I think 6 months is enough for me. I might die with excitement and anticipation if I wait longer!)

Large earnings in such a short period of time can cloud a person’s judgment and lead to irrational financial decision making. 

Just have a look at the statistics for those (un)fortunate lottery winners.

So, what to do when you get a large sum of money? 

The next tip I have for you is:

2.Talk to Experts

Who better to help you learn how to manage a large sum of money than a financial planner? 

That is literally their job. If your newly found wealth has a significant impact on your net worth, then the first thing you should do is speak to an expert. 

If you haven’t thought about financial goals or mapped out a plan to achieve them, you can do this with the help of a financial planner. 

A financial planner can help you make informed decisions with your money. 

Your mind most likely will be all over the place -having an expert on your side or a team of advisors to help you manage your windfall will keep you grounded and on the right track.

What To Do If You Come Into A Large Sum of Money?

On to the main event, what should you do if you come into a large sum of money? Here are some things you could do with your money:

1.Pay Off Your Debt

One of the best things you can do if you have recently come into a larger sum of money is to pay off your debts.

Maybe you racked up credit card debts, student loans, whatever it is, paying off your debts is a long-term investment you can make – take that money and pay off high-interest debt right this second.

Even if you can’t completely pay off your debts, even paying down the balance and lessening your debt will make a big difference. 


 It will reduce your interest costs and you can pay off your debt faster. This is especially true with credit card debts.

2.Build Your Emergency Fund

What to do with a lump sum of money? If you’ve paid off your debts (or you don’t have any debts), you can use your windfall to start building an emergency fund.

What is an emergency fund? 

An emergency fund is a personal budget set aside as a financial safety net for future mishaps or unexpected expenses. 

Let’s say you’re out of a job -in case of an emergency, you should have six months’ worth of your monthly expenditure in there to keep you afloat while you look for other work.

The rule of thumb is every person should have at least 6 months essential expenses saved in an easily accessible emergency fund. 

This way, if anything unexpected happens, you have the money saved aside without having to take out a credit card or loan.

3.Save for Retirement

Maybe this isn’t the fun thing to do but with great wealth comes great responsibility. 

Try not to think of short-term gratifications but set your sights ahead, way way ahead into the future. Save that money for your retirement so you know you’re secure. 

Take a look at your retirement accounts (if you don’t already have one, you should whip out a calendar and start saving now) and check to see if you’re on the right course. 

Are you saving enough? Will you meet your financial goal? If not, your newfound money should go straight into this category. 

4.Invest in Real Estate

Renting is a waste of money and that is the truth. If you have enough money to do so, you should consider buying a home and using some of that money to use as a down payment for your future home. 

Switching from renting to owning can be a large financial boost and will save you thousands in the long run. 

5.Save It For An Upcoming Expense

Two words. Sinking funds – this is the way financially independent people are able to afford purchases in cash instead of going bankrupt for them.

What is a sinking fund you ask? 

Sinking funds are funds that you have set aside or saved for something specific. Ideally, one would have an allotted amount of money deposited each month into a single fund for a specific amount of time. 


The most common question I get asked is, “what should I do with a lump sum of money?” 

Let’s say you’ve paid off all your debt, your emergency fund is looking fantastic, you’re not sold on a sinking fund but you have some extra cash lying around. What do you do with it?

You invest it!

Make your money work for you by making smart investments. 

Your investments will continue to grow and make you more money in the long-term. Looking for consistent returns in the long run? A balanced portfolio between stocks and bonds will get you there.

7.Update your Estate Plan

Maybe you’ll think this is a bit morbid or maybe you haven’t thought of this yet but no one is too young to do this.

 If you are already thinking ahead and saving up for your retirement, why not look one step further and plan (or update) your estate plan? 

Especially after a significant change in net worth -this is a great opportunity for you to choose where this money will go in the case of an unfortunate event.  

8.Treat Yourself

Running out of ideas on what to do with a large amount of money? 

 Here’s one: treat yourself (sparingly).

 Even if you use most of the money on one of the options above, consider putting a little bit aside for yourself -you can finally buy that one thing you’ve had your eye on for ages. 

Maybe it’s a vacation or a nice meal at a restaurant; whatever it is, spending some money on yourself can be a huge emotional boost. 

What is the point of coming into a fortune if you don’t treat yourself a little?

PS; Or treat others! It has been scientifically proven that helping others makes us happier. And that’s ultimately what we all want right? To be happy? 

9.Mix and Match

And last but not least, you can mix and match these options. Who’s to say you can only choose one option? I say put your eggs in different baskets and do what’s right for you. 

It’s your money and you get to decide what you want to do with it. 

Depending on how much money you come into, doing a mix of savings, paying off debts, and investing is the best choice you could make financially. 

Here’s a thought? Why not donate some of that money and give back to the less fortunate? 

That’s an investment in others and a choice that enriches the soul.

What Not To Do With A Large Sum Of Money?

Now that we’ve covered the best thing to do with a lump sum of money, let’s go into what not to do with a large sum of money. 

I know, I know, I did say it was your money and you get to decide what to do with it, but hear me out.

 You’ll want to know this stuff.

Don’t Radically Change Your Life

You’ve recently come into a fairly large amount of money. You feel great, you’re on top of the world. But please, resist the urge to do any of the following:

  • Quit your job in a dramatic fashion
  • Buy an expensive new car, boat, or yacht
  • Upgrade to a luxury apartment, house, or mansion

Don’t go all MC Hammer and change your life radically. It’s so hard to get a large sum of money but so easy to lose it all. Look at all the bankrupt celebrities out there!

This isn’t a monthly paycheck and depending on your windfall, you may not be able to keep up these expenses. 

Keep your lifestyle more or less the same to avoid racking up any new and unnecessary expenditures.

If you do want to change things up, go back to tip one: pause, give yourself some time to think, and wait before making any rash decisions. 

Don’t Forget About Taxes

Consult with a lawyer or accountant on this matter. 

Depending on how you came into this money, you may be taxed -won big at the casino? That’s taxable. Did you win the lottery or a game show? That’s also taxable. 

Received your inheritance? That’s debatable -depending on the type of inheritance and value, you may or may not get taxed. 

To avoid any unwelcome tax surprises, make sure you are aware of your tax obligations. 

Don’t Shout It From The Rooftops

This is optional but I highly recommend not shouting it from the rooftops. With riches comes ‘fame.’ 

You never know what long lost cousins are waiting in the wings, ready to make their coincidental appearance. 

Worst-case scenario, someone plots your murder and tries to inherit your money (this is why you plan your estate) but I say to avoid that entirely by not announcing your big win.

Where Can I Keep A Large Sum Of Money?

You have all this money but now you’re no longer asking what to do with it but where to put large sums of money and how to protect large sums of money.

 Those questions are valid and very important.

Coming into a lot of money can be great but it can also be a heavy weight to bear if you feel paranoid about its safety. Here are a few things you can do to keep your money safe:

Choose the Right Accounts To Protect your Money

Take some time to do some research on the best bank accounts to keep your cash in. 

Depending on the bank and their rates, you can earn some money just by placing it in the right place.

Savings Accounts 

What to do when you come into money? Open a savings account. Put your money away in a savings account – bonus points if you can find an account that is a savings and investment account. 

Please go to your bank and ask them their best savings and investment accounts, 

Certificate of Deposit (CD)

Certificates of deposit (CDs) are another way to ensure your money stays safe. 

What’s the difference between a CD and a savings account? A savings account means you are able to easily access the funds but with CDs, you need to lock up your investment for a specified duration -this can range anywhere from a few months to few years.

Who would lock up their money and choose to not be able to access it for so long? And why would anyone do that?

CDs are like fine wine or aged cheese -they get better with time or in this case they mature. CDs with longer maturities pay interest at higher rates than CDs with shorter maturities. 

Precious Metals

This one is old school -imagine a dystopian future; one where financial markets cease to function. 

Precious metals like platinum, copper, silver, and gold are a great investment as they will not only hold their value but will stand a chance to appreciate. So, why not trade in your cash for blocks of gold?

Some other investment options are ETFs, Roboadvisers,shares , just to name a few! 

Have a google and if you want to know more, drop me an email. 


If you’ve found wealth overnight and you were wondering what to do with a large sum of money, I hope this article helped with that not so little conundrum.

The bottom line is your personal finance is just that, yours and personal -you get to decide what to do with your money. 

So, what are you going to do with your newfound wealth?

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What To Do With a Large Sum Of Money(And What Not To Do!)

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