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Prudence Is Paramount

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CWR Building Wealth – Prudence Is Paramount

By Dwight Harshaw, BBA, Personal Finance Counselor


Dwight Harshaw, BBA

Dwight Harshaw, BBA

Many of us know someone or-are ourselves-beneficiaries of a financial windfall of some sort.  It may be the rare result of winning a game of chance such as the lottery, casino games, or betting in general.  Often times it’s the result of receiving an employment lump sum, sale of property, sale of a business, insurance proceeds, or an inheritance.  It does not matter what caused the windfall, what matters is how it is handled.  It can be used sensibly or squandered. It can be a curse or a blessing for the recipient. Here are five things you should do if you receive a financial (cash) windfall:


Take possession. Whatever it takes to receive your money, do it. It should be done in a timely manner. If there are things you don’t understand or don’t want to deal with, seek assistance from someone you trust. The person you seek assistance from, whether friend or professional should help you to become an expert at the task.


Secure it. Since receiving a windfall is not an ordinary event, take your time deciding on how to use it. Put it in a safe secure place. A good place to put cash is in the bank or a brokerage cash account. Both are insured up to $250,000 for cash deposits by the Federal Deposit Insurance Corporation (FDIC) and the Securities Investor Protection Corporation (SIPC) respectively. Depending on the size of your fortune, you may have to spread it around to several places. Your money will not earn much but it will be safe and hopefully there for only a short period of time. That gives you a chance to sort things out.


Pause, take a break. Avoid making commitments at the time you receive a windfall because you’re not thinking straight. There may be pressure from family, friends, and others for you to make decisions; nevertheless it is wise to give yourself time to get use to your new situation. If your financial windfall is the result of the death of a love one, you need time to grieve. If it’s from an employer or from winning a game of chance, you need time to evaluate your future. Money is useful and it will serve you for a lifetime-not just for a fleeting moment-if you use it properly.


Increase your knowledge on the proper way to use your gain to achieve your goals. If you haven’t set financial goals, this is when you should do it. Define what you need and desire for your future. Also use this time to take a personal finance class, learn about investing, risk, and strategies. The more knowledge you have about personal finance the less likely others can take advantage of you. Find people that will help and teach you about money matters and don’t be afraid to get several opinions on how you should proceed.


Be sensible.

  • Take care of your needs first. Pay off debt, increase your retirement fund, or use it for income.
  • Invest in what you feel comfortable with. If you don’t understand it, don’t do it.
  • Don’t start a business without proper research and consultation.
  • Don’t spend frivolously on things that don’t hold value well. Cars, clothes, and vacations are fun but they don’t increase your wealth.
  • Don’t overspend on housing. Homes hold value but you should not buy more than you need to live comfortably.
  • Avoid using credit. If you can’t pay with cash, you can’t afford it.
  • Don’t loan money because more than likely you won’t get it back.
  • When family, friends, and organizations compete for your generosity, don’t give foolishly.


Finally be careful. We all know them, people who’ve had it and lost it. They did not take the time to sync their mindset to their new asset. In wealth building, prudence is paramount.

© Copyright Donell Edwards Media, 2008 -2013. All rights reserved.


About Dwight Harshaw:  Dwight Harshaw is a personal finance counselor and writer. He is also a Realtor with Access Realty, Inc. in Little Rock, Arkansas. He has a BBA from the University of Arkansas at Little Rock in Finance with emphasis on financial planning.

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