How To Not Burn Through Your Settlement Money
If you have been injured and it was not your fault then you might be entitled to a personal injury settlement.
To get this settlement, you will need to collect the important evidence and hire a personal injury lawyer, like Jeff Benton, a personal injury lawyer in Dallas. Together you will create a case and head to court.
The people you will sue will either pay out of court or will be forced to pay you by the court. Once you have this money, it is yours to do as you wish.
How much you win will typically be based on how bad your injuries were, if you lost your job, and how much you had to spend on medical bills.
Today, we are going to look at how you can protect your personal injury settlement money after you have paid off all your debts.
Do You Have To Pay Taxes On Personal Injury Payments?
You will typically not have to pay taxes on your winnings as they are not considered to be earnings by the government. Even though they are typically paid out to cover lost wages.
The only exception to this is if you have already claimed a tax deduction on any of your medical bills because of your injury.
If you are not sure what category you fall into, we recommend that you work with an accountant so that you file your tax returns correctly.
Create A Budget As Soon As You Know How Much Money You Will Get
A lot of people don't set up a budget until they are running out of money – however, setting a budget as early as possible should prevent that from happening.
We recommend taking the time to make a budget and put all your automated payments into play as soon as you know how much money you will be getting in the settlement.
You will probably be using some of the money to pay off debts and medical bills. Then you will need to sit down and work out how long you need to make the rest of the money last.
Use Prepaid Debit Cards Or Cash
If you have to work within a budget then the best thing you can do for yourself is make it hard to overspend.
One of the best ways to do this is to use a prepaid debit card every month or use the envelope stuffing (cash) method.
These two methods involve you having access to the money you have budgeted for and nothing else. That way, you cannot overspend without going through a lot of effort.
Keep Paying Your Insurance Premiums
Sadly, life isn't simple or easy. Just because something bad has happened to you, it doesn't mean that something bad won't happen to you or your family again.
This is why it is so important that you put some of your personal injury settlements aside to pay for insurance.
You will thank yourself if you or someone in your family is injured again and you are able to pay your medical bills without wiping yourself out financially.
When people are looking to save money, insurance is often the first thing to get dropped, when really it should be the absolute last thing you stop paying.
Get Advice From Your Personal Injury Lawyer
Your relationship with your lawyer shouldn't end when you get your case results. Having gone through this process many times with many different people, they are in the perfect position to give you some great advice.
They will be able to help you deal with the creditors to whom you owe money as well. They can either help you to set up split payments, or check that the lump sum they are asking for is the correct amount.
They will be able to point you in the right direction of financial advisors, insurance companies, and any other kind of expert you need after the trial.
Don't Announce Your Winnings Too Publically
If the people in your life know that you have just been given a big settlement, you might find that suddenly everyone wants to borrow money from you.
The other reason you should not announce that you have been awarded a lot of money is that doing so will make you the target of scammers and thieves.
One of the best ways to protect your money is to not let the wrong people know it exists.