5 Smart Ways to Use an Insurance Settlement
Receiving an insurance settlement can be considered a mixed blessing. On the one hand, it’s always nice to receive a lump sum of money you weren’t expecting. On the other, you’re receiving the settlement as a result of less-than-ideal circumstances. But the good thing is, you made it through and now have unexpected funds available to help you reach your financial goals. Take a look at the 5 smart things you can do with an insurance settlement.
One of the smartest things you can do with money from an insurance settlement is pay off outstanding debt. Whether it’s remaining medical bills, personal loans or credit card debt, use your settlement money to pay off as much debt as you can.
If it’s not enough to wipe out all your current debt, it’s at least enough to give your payoff efforts a boost. Combined with one of these debt payoff strategies, your insurance settlement could be the financial fresh start you’re looking for.
Enhance Your Career
If you’ve been wanting to make some bold career moves, use your insurance settlement money to make them a reality. You can return to school to pursue or complete a degree, take specific skills-related classes to enhance your resume, or even put the money toward opening your own small business. Spend some time thinking about where you’d like to see your career in the next 5-10 years and let your settlement money help you get there.
Support a Cause
Feel like making a difference? Use all or part of your insurance settlement to donate to a cause you are passionate about. You’ll not only feel great for helping, you could reduce your tax liability. Since most charitable donations are tax deductible, you’ll take less of a hit on your taxes if you donate at least a portion of the funds from your insurance settlement.
Upgrade Your Home (or Become a Homeowner)
Most people have a running list of things they’d like to upgrade around the house, if only they had the money. Well, now you do. Using your insurance settlement to make home improvements is a smart way to invest that money. Not only do you get to enjoy living with the upgrades, there’s a good chance they will add value to your home in the long term.
Start by taking care of any needed home repairs or appliance replacements. Once you cover the necessities, you can put in that home theater system or create the home gym you’ve been dreaming about.
If you’re not a homeowner yet (but want to be), use your insurance settlement money toward a down payment.
Prepare for Emergencies
If you’re receiving an insurance settlement, you already know better than most that accidents can happen. That’s why it’s so important to save 3-6 months’ worth of living expenses in an emergency savings account. For most, that’s a lot of money they have to save in small increments over a long time. But your insurance settlement is the perfect way to build a robust emergency savings account quickly.
It may not seem as instantly gratifying as some of the other options, but the peace of mind you feel from having a fully funded emergency savings account is truly priceless.