Often personal injury victims have a tough time, financially, while their cases make their way through the courts or through a lengthy settlement negotiation. Medical bills can pile up, and lost work time may mean cutting corners and overusing credit. When the settlement check comes, the temptation may be strong to put those days of strict budgeting behind you. However, money management is even more important once that settlement comes in.
It’s more important because good management of a lump sum payment can generate income for you. It’s also more important because while you were waiting for the settlement, there was always money coming. Now, unless you’re receiving a structured settlement, this is it–there’s no more where it came from, and it has to cover all of those expenses you incurred during and after your injury, provide for any future medical care or associated expenses, and often cover interest charges and late fees that piled up while you were unable to work.
Even big lottery winners sometimes end up in bankruptcy. A personal injury settlement is hardly a windfall like winning the lottery, but it may be a sum of money much larger than you’re used to handling at one time, and it may look like it’s going to stretch much further than it really will.
Some tips for making sure that money provides what it was intended to provide:
1. Don’t start spending money right away–put the money into an interest bearing account and let it sit there until you’ve had time to take some of the other steps on this list and to think through your priorities.
2. Make a list, in order of priority. Include outstanding bills, any remaining medical care and supplies, expenses related to your accident, debts (especially those with high interest rates)…and THEN the things you’d like to do if there’s adequate money left over.
3. Invest. Depending upon the amount of your settlement, you might be surprised to discover how much that money can earn for you. Before you do, though, get some good advice about short and long-term investing, and make sure that you’re maximizing your returns while allowing yourself security and whatever flexibility you need to access cash.