Money Read Time: 3 min

What To Do When Your Income Reaches 7 Figures

Did you recently add a second comma to your bank balance? Has a recent financial event raised your net worth to the next level? It's an exciting time, whether it's the result of your long-term goals (e.g., from the sale of a business), a windfall transfer of wealth, or a key promotion. You're probably already considering how to protect and manage your wealth.

Keep in mind that this article is for informational purposes only and is not a replacement for real-life advice. Consult tax, legal, and accounting professionals before modifying your financial strategies as your income changes. This article was written to provide insights into a few related factors you may wish to consider.

Estate Strategy on a New Playing Field

You may already have an estate strategy in place. However, reaching a new level of wealth may be an excellent time to revisit your approach. More wealth can mean a larger estate and more complex estate issues. For example, it may be time to consider a living trust. You create a living trust while alive and fund it with the assets you choose to transfer therein. The trustee (typically you) has full power to manage these assets. But using a trust involves a complex set of tax rules and regulations. So before moving forward with a trust, consider working with a professional familiar with the relevant rules and regulations.

Pace Yourself

Many newly wealthy individuals feel like they are in a rush once they have their money. Now that the world is your oyster, you may be better off waiting for the pearl. This means getting accustomed to your new bank balance before putting the money to any practical effect. A few conversations with a financial professional regarding your ambitions may help put things into perspective.

What You Need Today

Your new wealth will create as many questions as it will opportunities. For example, if you've sold your business or are considering leaving your job, you will need to consider health insurance choices for yourself and your household. Other household demands may also warrant consideration, from travel costs to big one-time purchases. You will almost certainly face some unplanned expenses along the way, so be sure that your short-term budget makes an allowance for that.

Risk Tolerance and Time Horizon

Your risk tolerance will be affected in part by your ongoing day-to-day needs. For example, if you're considering buying a new home, money may need to be earmarked for all expenses related to that purchase. The risk takes into account not only the home itself but also your overall strategy. The time horizon determines the lengths of time considered for your various expenditures. Some unexpected expenses may happen within a few months, while others can be put off for up to a year.

Congratulations on that second comma becoming a part of your everyday life. It will mean many exciting things for you and your household, some of which you've prepared for and others you might not have anticipated. A trusted financial professional in your corner may provide answers to your questions along the way.

The content is developed from sources believed to be providing accurate information. The information in this material is not intended as tax or legal advice. It may not be used for the purpose of avoiding any federal tax penalties. Please consult legal or tax professionals for specific information regarding your individual situation. This material was developed and produced by FMG Suite to provide information on a topic that may be of interest. FMG, LLC, is not affiliated with the named broker-dealer, state- or SEC-registered investment advisory firm. The opinions expressed and material provided are for general information, and should not be considered a solicitation for the purchase or sale of any security. Copyright FMG Suite.

 

Related Content

Insuring Your Business With a Buy/Sell Agreement

Insuring Your Business With a Buy/Sell Agreement

It may help your business be better prepared in the event of the death of a principal or key employee.

Best-Performing Asset Classes

Best-Performing Asset Classes

Bonds may outperform stocks one year only to have stocks rebound the next.

Forecast

Forecast

The market is as unpredictable as the weather. We'd love to help you prepare.

 

Have A Question About This Topic?







Thank you! Oops!

What Can You Buy With 529 Distributions?

This article can be a helpful guide when begin preparing for education expenses.

Is Term Life Insurance for You?

Term insurance is the simplest form of life insurance. Here's how it works.

Buying a Vacation Home? 5 Questions to Consider First

You may be considering purchasing a vacation property, this can be an exciting milestone, but there are a few things to consider first.

View all articles

Should I Buy or Lease an Auto?

This calculator compares the financial impact of leasing versus buying an automobile.

A Look at Systematic Withdrawals

This calculator may help you estimate how long funds may last given regular withdrawals.

Disability Income

This calculator estimates your chances of becoming disabled and your potential need for disability insurance.

View all calculators

An Inside Look at Retirement Living

A number of questions and concerns need to be addressed to help you better prepare for retirement living.

5 Smart Investing Strategies

There are some smart strategies that may help you pursue your investment objectives

Managing Your Lifestyle

Using smart management to get more of what you want and free up assets to invest.

View all presentations

16 Wall Street Cliches in 60 Seconds

Pundits say a lot of things about the markets. Let's see if you can keep up.

Safeguard Your Digital Estate

If you died, what would happen to your email archives, social profiles and online accounts?

When Do You Need a Will?

When do you need a will? The answer is easy: Right Now.

View all videos