In big families, news can travel fast about incoming money. You may want to help your family and community, but it's important to take time to think about your options.
If you are going to receive a large sum of money – such as a refund, royalties, inheritance or compensation – it can bring opportunities, but it can also bring challenges.
Until you have thought about what you want to do with the money, think about keeping the information about the money private or only share details with someone you trust. This could be a friend, family member, or a financial counsellor.
Sometimes, payments can come because of terrible things that have happened. There’s no shame in talking to someone – 13Yarn is an Aboriginal and Torres Strait Islander run crisis support line that is free and confidential. Call 13Yarn on 13 92 76 – available 24 hours, 7 days a week.
Understand how your payment could affect your situation
Knowing the kind of money you are getting will help understand how it could affect any Government benefits and payments you get, such as from Centrelink.
Different types of payments are treated differently. For example, compensation payments through the National Redress Scheme are usually ‘protected’ from being taken for Government debts, like tax, child support, or fines. However, other types of payments may be taken for Government debts, like the Australian Tax Office using a refund to pay off a tax debt.
If you get money while you are bankrupt, it will form part of your assessable income, and you must tell your trustee.
To help you plan, get written information about the type of payment from the organisation that is going to pay it to you. Tell any Australian Government agencies you are involved with, like Services Australia or the Australian Tax Office. They will tell you if the money affects any payment you may get from them.
Make a plan for your money
Getting a large payment can help you do things you couldn't do before, such as pay off your debts or invest in something for your future.
It's natural to want to help your family straight away, but it's important to take time to make decisions about how you want to use the money.
Before you get the payment, think about your priorities for the money. Your personal money goals might include:
- Pay off your debts – Speak to a financial counsellor before getting your payment about managing your debt.
- Rainy day savings – If you want to put some money away, think about using a savings account. Look for an account with low fees and the best interest rate.
- Buying an item – If you and your family need to make a big purchase, like a car or fridge, you could use some of your payment to buy this item. Buying an item outright rather than seeking finance or credit for the purchase, can save you from extra fees and interest.
- Invest your money – You could put money into a managed fund, shares or property to help your money grow. Investing is a long-term activity, so before you invest, make sure you understand what's involved. See how to invest for tips on where to start.
Dealing with family pressure about money
If your family know you have received a large sum of money, they may expect you to give them some of it or buy them things.
Think about any pressure you might get to share the money. Talk to a trusted person about how you could respond to pressure from someone, and how you can keep your money safe. It’s okay to say no or wait until you’ve thought about your options.
Dealing with family pressure about money can be difficult but think about your needs first. You can still help your family in ways that keep your own future safe.
Your will gives your things and money to the people you want to have them when you pass away. A will is important when you receive a big payment. If you pass away without a will, the court will decide who gets what you leave behind. This can take a long time and be expensive and stressful for your loved ones.
Find out more about making a will.
Keep your money safe from harm
Be careful who you tell about getting a big payout.
It's a good idea to talk to someone you trust, like a financial counsellor, if you think someone is trying to take your money.
Be wary of scammers
If someone knows you’ve come into some money, they may try to scam you. People might try to trick you out of your money or promise you something if you give it to them – but you might not get anything in return.
If someone comes to you with an offer about how to spend your money, make sure they aren’t trying to trick you. Learn how to spot the signs of a scam.
Financial abuse
Financial abuse can happen when someone takes away your access to money, manipulates your financial decisions, or uses your money without consent.
Financial abuse can happen to anyone. It is never your fault. There are support options available if you or someone you know is experiencing financial abuse.
Get help deciding what to do with your money
If you find out that you will be receiving a big amount of money, it can be hard to work out what you should do with it. You might also have some difficult feelings coming up at this time. There is help available:
- Financial counsellors provide a free, confidential and independent service. They can suggest ways to improve your financial situation or help you organise your finances and do a budget.
- Free legal advice can help you understand how your payment might be treated, and whether it might be subject to any government debt recovery.
- Services Australia Financial Information Service (FIS). FIS officers can help you understand how using the money may affect any Centrelink payments you receive.
- Centrelink. If you receive benefits from Centrelink, call their Indigenous Call Centre on 1800 136 380. Ask them if a large payment could affect your entitlements. If you're receiving compensation through a lawyer, they can tell Centrelink on your behalf.
- Financial advisers charge fees for their services. They can help you work out options for investing or using your money. They can be expensive and are usually more helpful for people with larger amounts of money.
Take someone you trust with you to meet a financial counsellor. They can support you and help you ask questions about things you're not sure of.