There is a lot of financial responsibility after obtaining a large sum of money. Your main goal should be able to take the money you receive from your contract and make it work for you and your family. Here 5 things you should do right after you sign a contract.
1. Set up a personal balance sheet and give yourself a spending limit.
It is important to keep track of your spending. It may be tempting to use your newly obtained cash to buy many material things, but a little discipline today can make a big difference tomorrow. Create a budget to help keep you focused.
2. Consult with a financial advisor.
Setting up a financial plan involves several moving parts. Consulting with a professional to get your financial plan set up so that you and your family can have a long-term strategy for creating your wealth. Sitting down and setting up goals with a financial advisor will help you give you the chance to plan out what moves you need to make to build a successful plan. Do you need help finding a financial advisor? Check out this article on selecting a financial advisor.
3. Consult with a tax professional.
Understanding the ins and outs of your tax situation can be very beneficial. There are many tax benefits you may not know about. Tax laws vary by state. Consulting with a tax professional will help you discover how to best take advantage of certain opportunities. For example, choosing to live in a state that has no state income tax allows you to keep more of your take-home pay. Certain states, like California, have state income tax rates as high as 13.3% compared to Nevada, which does not have a state income tax.
4. Paying Off Debt.
Having a large sum of cash allows you to save money on the interest you may be paying on debt. It may be beneficial to pay off large portions or even the entirety of your debt. However, if you are going to spend all your cash reserves on paying down all your debt, you may want to consider the potential return you can make if you invest your cash. Consult with your financial advisor to consider your options.
5. Long-Term Goals
Having goals is extremely important, especially when it comes to a financial plan. You may want to establish a college savings fund for your kids, buy a new house, or start a business when your playing career is over. Your goals will act as the “light at the end of the tunnel”. Your plan will help you get there.