How to Make a Personal Injury Settlement Last
If someone else hurts you, you’ll likely be eligible for compensation in the form of a personal injury settlement. This type of settlement is usually designed to compensate you for damages you’ve already sustained, as well as future damages, so you could end up with a hefty lump sum.
How do you make sure this settlement lasts as long as possible?
Maximizing Your Settlement Payout
With the help of a personal injury lawyer, you can maximize your settlement payout. The vast majority of personal injury cases settle out of court, before they’re forced to go to trial. That’s because both parties are incentivized to avoid a trial unless absolutely necessary.
During the course of settlement negotiations, both sides will present evidence and their best persuasive cases. The defendant will be incentivized to reduce the settlement as much as possible, while the plaintiff will be incentivized to increase the settlement as much as possible. Your lawyer can help you decide on a strategy to include more damages and increase the nominal amount of each category of damages.
Hopefully, by the end, you’ll have a settlement offer that not only compensates you for all the damages you received, but also gives you a little something extra.
How to Make a Personal Injury Settlement Last
So how do you make that personal injury settlement last?
These are some of the best strategies to use:
· Plan for the long term. First, plan for the long term. Many people don’t have the financial sense to think decades ahead. Instead, they’re more concerned about what’s happening today, this week, or this month. If you want to make sure your personal injury settlement lasts as long as possible, you can’t get bogged down in these temporary, fleeting matters. Instead, you need to think about the long time horizon.
· Avoid reckless or impulsive purchases. In line with this, you need to avoid reckless or impulsive purchases. When a lump sum of money hits your bank account, you’ll likely feel what we all feel; you’ll be tempted to take a vacation, buy a new car, or indulge in other purchases that trigger a dopamine release. If this has been a particularly difficult experience for you, there’s nothing wrong with indulging in some little reward or celebration, but for the most part, you should focus on things you truly need.
· Organize your total finances. This is a great opportunity to organize your finances overall, especially if you haven’t done it in a while. Take inventory of all your assets, all your debts, your current monthly needs and expenses, and any sources of income that you have. Put together a budget that itemizes all your income and expenses, so you know exactly how much you need to survive.
· Prioritize your most urgent needs. When drawing upon your settlement money, always put your most urgent needs first. Urgent needs are typically things like your housing expenses, food, utilities, and other immediate necessities. You may not need to pay off your medical bills right away, nor is it a high priority to replace a vehicle that still works perfectly well on its own.
· Consider paying off high-interest debt. High-interest debt should be high on your financial priority list. That’s because the power of compound interest can cause your owed principle to multiply several times over. If you pay off your debt early and strategically, you can prevent this and save a lot of money in the process.
· Continue making money (if you can). If you have the ability to work and continue making money, do so, at least for now. The extra income can help your personal injury settlement last longer and put you in a much better financial position. If you’re ever unable to work in the future, you’ll be glad you did this now.
· Invest. With the bulk of your personal injury settlement, it pays to invest. One of the most important rules to follow in investing is to diversify your portfolio, so consider investing in a multitude of different assets and industry niches. Many people just starting out with investing choose a careful balance of stocks, bonds, real estate, commodities, and alternative investments. There’s a lot to learn when it comes to investing, but it’s simpler than many people believe. With practice, it will become much more familiar and accessible to you.
If you’re smart and proactive, you can make even a relatively modest personal injury settlement last for years. If the settlement is sizable enough, it might even last you the rest of your life.
However, you’ll need to practice strict financial diligence if you want to get the most value from this payout.
