We’ve all heard the stories. Some lucky person picks the winning numbers, stands in front of the news cameras, and lives happily ever after, free of financial worries.

Okay, the first two things sometimes happen, but the “happily ever after” doesn’t always materialize. In fact, in most cases, sudden money leaves the winner worse off than prior to their windfall. Many winners who aren’t used to managing a large sum of money mismanage the funds.

Of course, odds of winning life-changing cash in a lottery are incredibly low. You’re more likely to be the recipient of an inheritance or an insurance settlement, and it’s the unexpected pile of cash that may create an initial sense of euphoria and a false sense of security.

“The vast majority of people blow through [a financial windfall or inheritance] quickly,” said Jay Zagorsky, an economist and research scientist at Ohio State University.

Whether large or small, it can seem like “play money.” And that is where the danger may lurk.

So, that brings us to the next question. What should you do if you happen to be the beneficiary of a financial windfall?

The suggestions I provide here are what I call the fundamentals. They may not apply directly to you, but they are common-sense tools designed to help you make smart decisions and prevent a windfall from being squandered.

10 steps to creating a firewall around your newfound stash of cash

1. First, do nothing. That’s right, do nothing. The temptation may be to buy a new car, take a luxury ruise or upgrade your living arrangements. That can begin an unwise cascade of purchases that will likely leave you feeling regret.

I suggest you wait at least six months before embarking on any life-changing decisions. The time spent waiting and planning allows the “shock” of your newfound wealth to wear off.

Besides, you need time to learn about exactly what you’ve inherited. Is it all cash? Stocks and bonds? Have you just become the owner of a business or real estate?

2. Doing nothing also means not quitting your job. It may be tempting, but lost wages and the lack of social interaction from your work buddies may lead to remorse, even if you don’t especially enjoy your job. Besides, without work, you run the risk of blowing through your money much faster than you had anticipated.

3. Talk to a trusted advisor. Find someone who has your interests at heart, not his or hers. If you are expecting to receive a windfall or have already received unexpected assets, let’s talk and see how we can incorporate them into your overall financial plan.

4. Reduce debt. We’ve always provided a holistic approach to financial planning. After things have settled down and you have a better understanding of your inheritance, it may be time to pay off high-interest debt. Once eliminated, you no longer have that burden of interest payments on your loans.

5. If you don’t have an emergency fund, now is the time. Set aside reserves for at least three to six months, preferably the latter. The future can sometimes throw you an unexpected curve ball. Having reserves set aside will reduce your financial stress.

6. Additionally, you may decide to allocate additional funds toward savings and retirement. Every individual is unique, with various goals, personal circumstances and financial resources. What I recommend may vary according to your unique situation, but these are good savings goals to address.

7. Think about tax and estate planning. No one is sure what may happen to the tax code year to year. It’s critical that we get a handle on the current tax ramifications of your inheritance in order to maximize the financial benefit.

For example, did you know that you may be required to take distributions if you inherit an IRA? What if you are already taking mandatory distributions? Things can get tricky, but sound advice can quickly ease any concerns.

Additionally, life changes are a great time to update your estate plan, especially if the inheritance increases the complexity of your financial situation.

8. Be cautious. Dishonest salespeople and relatives may suddenly warm up to you with the unspoken goal of separating you from your cash. That’s why a trusted advisor is critical. If you have a defined financial plan, it’s much easier to pass on potentially exploitative offers.

9. Consider charitable giving. Do you have a favorite charity? Would you like to help a niece or nephew finance their education? Now is the time to explore charitable opportunities.

10. Have some fun. There’s nothing wrong with treating yourself. As I provide counsel, I like to leave some room for self-indulgence. Traveling, home additions and remodeling, top-of-the-line golf clubs, a new car, or simply the everyday tasks of life you’ve been putting off can be included , once you’v e addressed other vital financial needs.

Helping you reach your goals is important to me. It would give me great pleasure to see you achieve your dreams.

With a financial plan in place that manages your windfall, you’ll feel more secure enjoying the benefits of your wealth without the possibility of using up your nest egg before you have much to show for it.

R.T. Jefferson

Woodmen of the World