How to Wisely Handle a Large Sum of Money

large sum of money what should i do

I work with people in a wide variety of situations. Many are paycheck-to-paycheck, struggling to make ends meet, and looking to pay off debt. But some have received large sums of money from inheritances, settlements, or commissions, and are wondering what to do with this large sum.

It can be both a blessing and a burden to suddenly have tens or hundreds of thousands of dollars in your possession. In these situations, there is a certain path I advise the household to follow. This will help to protect that money and make sure it is a blessing and not a curse.

Money is a magnifying glass—it will exacerbate what’s already there. So it’s critical to reflect on the disposition of our hearts and minds toward this world.

When we ground ourselves in our values, we will be better equipped to make wise decisions with a large sum of money instead of impulsive ones.

That said, here are some steps to help you manage this newfound wealth well.

Pause and Breathe

First, the most important thing to do is to pause and breathe. Whatever this amount is, it’s likely you’ve never seen an amount of money this large before. That can stir up some interesting emotions inside of you, ranging from excitement to fear to guilt.

The last thing you want to do is to make big decisions with money based on fleeting emotions. With the “Jackpot!” mentality, it is easy to make a whole lot of money disappear in a tiny amount of time.

There may be a whole lot of things you want to do with this money, some of them very good. But if you make choices impulsively, whatever you’ve received can disappear in all of 20 minutes.

Pause and breathe.

Assess Your Situation Before and After

Second, assess what your situation was before receiving this large sum of money. Think about what you were trying to accomplish before this was even on your radar; think about the struggles you were having.

Aside from having more money in your accounts, those things have not gone away.

The impulsive spending habits have not disappeared. The money fights have not been resolved. Your heart is still in the same place as it was before. And that can sometimes be a very dangerous place to be in.

It’s why NFL players and lottery winners have a disproportionately high rate of bankruptcy compared with the rest of the population. The influx of money does not change the condition of the heart and mind. The same habits that inhibited success before this money often lead to greater ruin.

Assess what your situation was before receiving this money.

Develop a Plan For Debt Freedom

Third, develop a plan for paying off your debts. If you receive this large sum of money, often it can completely pay off your debts and even leave you with some leftover.

With a large sum of money sitting in your account, there’s no reason to leave unpaid bills around. Credit cards, cars, student loans, etc. can be wiped out forever, and you don’t need to go back to that way of life.

This needs to be a methodical process, though, not slipshod and random. If you’re not sure how to pay them off, go one at a time, from smallest to largest. If you’re feeling overwhelmed, it’s okay to press pause for a little while to gain your bearings.

Even if it takes you a few months, that’s okay. It’s better to do it slowly and deliberately than quickly and without a solid direction.

Develop a plan to pay off your debts.

Protect this Large Sum of Money

Fourth, think about what you will do to protect this money. It will be easy to let it all slip away from you; there will always be demands, likely more when you get more money. But you need to decide what is and is not a priority for your household.

It’s okay to say no to some things, and we have to do that. The toughest part of having a large sum of money when you haven’t had it before is saying no.

That may mean putting it in a savings account for a while as you figure out where it needs to go and how to make sure it will grow and remain in your household.

It is also important to develop an estate plan so that when you die, this money will not ruin your heirs. If you give your money to someone who cannot handle it, that person will become even worse. And that large sum that you’ve worked to protect will disappear.

Find a good estate planning attorney in your area to direct the use of your legacy.

Think about what you will do to protect this money.

Develop a Team

Finally, develop a team who will advise you. This will include a good estate planning attorney (as mentioned above), but also a CPA, financial coach, and maybe even a marriage counselor.

If you are a person of faith, you may also wish you seek out spiritual guidance from a pastor or other qualified church elder. Preferably this would be someone with some financial expertise as well.

A large sum of money comes with a certain spiritual burden and responsibility. That can affect your relationships. Seek out and listen to the advice of trusted counsel.

In the multitude of counselors, there is safety.

Proverbs 11:14

Build your dream team.

Final Thoughts on Handling a Large Sum of Money

Suddenly receiving large amounts of money can sometimes catch us off guard. And our reactions may be mixed. That’s okay, though. Money represents a kind of power, and we may not yet know how to use it wisely.

Sometimes there are even feelings of guilt that comes with sudden large sums of money. “Why me? What did I do to deserve this?”

But I want to assure you that there’s nothing to feel guilty about. Unless you’ve stolen it or manipulated it away from someone, there is nothing morally wrong about such a large sum of money coming to you. And having this wealth does not, in any way, take away from someone else.

At the end of the day, we can do one of three things with money—give, save, or spend. And we need to do all three in proper ratios for our circumstances. Reflect on your values and make decisions that take you to the places you want to be and the person you want to become.

If you’re in this situation, let’s talk about what you can do to wisely handle this blessing. Book your free Discovery Session today to use this money to help create generational wealth. I look forward to meeting with you soon!

Get the Latest in Personal Finance!

Success! You're on the list.