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7 Things to Do First When You Get a Large Sum of Money
7 Things to Do First When You Get a Large Sum of Money
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7 Things to Do First When You Get a Large Sum of Money

Eunniah Mbabazi
September 13, 2021

If you were to receive a large sum of money today what would you do with it? Have you thought about it? Do you have a laid-out plan? A lot of times, we just imagine what life would be like if we had a lot of money. 

Sometimes, however rare, we stumble upon huge sums of cash that we did not expect. This could range from a huge insurance payout, a golden handshake/severance package after being laid off, a business deal with profits in millions or a good old gambling jackpot.

It could be huge enough to get you a yacht or a Rolls Royce. It is important to take your time before making any decisions because sometimes, it may be a bit overwhelming. In fact, there is no shortage of stories of people who squandered millions they stumbled on whether by luck, inheritance or actually earned from their sweat. 

If used wisely, a big monetary windfall could transform your life significantly. Here are some things you might consider when you get a significantly huge amount of money at one go. Note that huge amounts of money are different for every individual. For someone it could be less than Ksh100,000 and for someone in a different income level it could be nothing less than Ksh100 million. 

1. Pay down debt

Paying off debt could become your number one priority. This is applicable especially in a case where you have high-interest debt. Like loans from shylocks and short-term high-interest app loans or conventional bank loans that could be costing you a lot.

Paying off your debts could be one of the best decisions you can make investment-wise. It takes you off the downward stairway. This is most likely true of loan app debt, which could be costing you up to 21% interest in a month depending on the repayment option you choose. 

2. Build your emergency fund

In a household, the rule of thumb is to have about 6 - 12 months worth of living expenses saved up in an account that is easily accessible to the person. That way, if sudden expenses come up, like an automobile repair, medical emergency, house repair, or maybe you need to travel, you have the money readily available and you won't have to turn to loans to cover the cost. 

This amount goes a long way to protecting you against other events like loss of income, giving you a grace period to look for other work.

An unexpected windfall is especially ideal for building a robust emergency fund since you will typically not have planned to spend this money. It is advisable to put it in a high-yield savings account so that it grows over time. 

If you had trouble before creating an emergency fund, this could easily solve that problem and give you that peace of mind you need to invest, take a little more risk and bolster your journey to financial freedom

3. Save and invest

If you are, financially, in a good place at the moment, then it could be time to consider how you could make your money grow enough to support you comfortably in the future. Some ideas in this category include:

  • Investing the money so it can grow and you could use it in the future to cater for what your needs and wants might be. A balanced portfolio of bonds and stocks tends to give fairly consistent returns in the long run.
  • Revisit your retirement savings account and consider whether you are on target with the objective of your retirement savings. If not, a proportion of the money you have stumbled upon could be put there.
  • If you intend to buy a home in future, you could save some or all of that money to use as a down payment or to cover the complete closing costs. Making the switch to owning from renting can be a huge financial boost, depending on your specific situation.

4. Treat yourself

Even if you spend most of this lump sum you found for either of the above purposes, consider putting aside at least a little of it to spoil yourself. Go get that thing you have always wanted to get. Maybe you have desired a new TV, new sound system, a road trip, or even a vacation. 

Treating yourself can provide an emotional boost. It is better this way than having to feel some resentment towards yourself because you didn't get to use the money you got.

5. File your taxes

This entirely depends on how you came by this money. It is possible that the government could want a cut. Income from gambling is taxable. The lottery and winnings from a prize game could also be taxable.

Regardless, ensure you are aware of what your tax obligations are so you do not end up with a rude awakening. Tax evasion is a serious crime and you can get jailed for not accounting for your taxes.

6. Choose the right accounts to protect your money

While you use a chunk of your money to invest, it is also good to have some money in the bank. Doing this will give you easy access to your money whenever you need it.

You could consider various options when it comes to storing your money. Some of these options could get you some interest on your stored money. These include:

  • A Savings account. These have higher interest rates than current accounts. A current account is the bank account that allows you to carry out everyday transactions. It allows convenient and easy access to your money.
  • A Certificates of deposit (CDs)  A CDs would usually earn more interest than a savings account, but the condition is that you must leave the money in the CDs for a fixed period, which could be one, two, even five years. If overspending is a cause of worry for you, then maybe a CDs can be a great way to force yourself not to touch that portion of your money you want to store.
  • A Money Market Account. A money market account is an interest-bearing account at a bank. Most money market accounts pay a higher interest rate than regular savings accounts.

7. Making your money last

A sudden increase in the balance in your account is a huge test for your self-control. Whoever you are. Even if you are the kind who usually makes sound financial decisions, it is still very tempting to go purchasing everything that becomes appealing to the eye and be a little extra with generosity towards the people you know.

There is no fault in enjoying your windfall on occasion, but don't overdo it. Being smart about how you will allocate your money is important so that you can keep it for the long haul.


Deciding what to do with the money you have gotten unexpectedly can be a daunting task and could be an opportunity to improve your situation financially. While it can be tempting and easy to go the carefree route, carefully think through all your options. Consider the tips discussed above when choosing the right path as this will maximize the impact of this money and is the smartest thing to do.

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Eunniah is an experienced business writer and editor. She is also a published author with two titles under her belt; Breaking Down and If My Bones Could Speak. You can find Eunniah on Twitter @Eunnyversal

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