If you are unfortunate enough to be injured as a result of someone else’s actions or negligence, hopefully you will be able to connect with an injury firm who can get you the compensation you rightfully deserve. We pride ourselves in helping clients secure financial compensation for their injuries, but we also pride ourselves in ensuring that you know how to appropriately manage that potentially significant payment so you don’t run into issues down the road. Below, we talk about developing a financial plan ahead of a personal injury settlement windfall.
Smart Ways To Manage Your Settlement Money
We’re not going to be able to tell you exactly how to manage your money after a personal injury settlement because although we have familiarity with the system and know some of the common mistakes people make, every situation is unique, and you need to consider the factors that matter most to your family. With that said, here are some of the things you should keep in mind when working to determine how to best manage an impending injury windfall.
1. Understand Your Long Term Medical Needs – For starters, make sure that you understand your current and long-term medical needs as it pertains to this injury. Will you need additional care down the road? Will the injury prevent you from moving up in your company? Are future expenses to be expected? Know that many settlements account for future medical expenses, so you should strongly consider budgeting that money for a time when you’ll need it later in life. Talk with your doctor and your lawyer about the long-term effects of your injury and your expected care needs.
2. Settlement Structure– Take into consideration how you want to receive your money. It can be easier to misspend a larger lump-sum settlement, but you can also make more money on your settlement by putting the larger amount in a high yield savings account or CD at the bank. Similarly, if you’re working to collect compensation for a child or teenager, talk with your lawyer about setting up a trust or similar account that will hold the funds until adulthood or so that it’s less likely they’ll get into financial trouble as a result of a large windfall at a young age.
3. Know What You Owe – Be aware that the total amount offered in the settlement may be lower than what you’ll get when all is said and done. You’ll have to settle up with your injury lawyer, and if part of the settlement is earmarked for medical expenses that ended up being covered by insurance, know that some of that money will be paid to your health insurance provider. Talk with your lawyer so that you know what to expect your take home amount to be after you receive an offer from the insurance company.
4. Clear Debt– The closest we’ll get to telling you how to spend a settlement check is this. If you ended up taking on any debt as a result of your injury, consider earmarking some funds to help reduce or eliminate this debt. For example, if you began carrying a balance on your credit card after your injuries because you couldn’t work, do what you can to clear this debt. Carrying a balance on a credit card or cash advance will just continue to drain your hard earned money with high interest rates. If you have any new or old debt that can be managed without adding financial strain after receiving a windfall, this is a good place to consider using some of your money.
5. Maintain Spending Habits – Finally, we oftentimes recommend maintaining the same or similar spending and lifestyle habits after a personal injury award. Don’t start going out to eat five nights a week or heading on vacation right after getting your award. We’re not saying that you need to act like you never earned compensation, but try to maintain old spending habits, because it’s much easier to maintain habits than to cut back on spending when the settlement money runs out.
Let us get you the money you deserve after an injury and help ensure you manage a large windfall properly. For more information, or for help with a personal injury or workers’ compensation case, reach out to the team at Hey Workers today at (844) 439-9675.
