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The Importance of Financial Planning: By Michael Blake, Financial Advisor at Merrick Financial Group

December 8, 2021 | Michael Barasch
Michael Blake, Financial Advisor at Merrick Financial Group

Your VCF award is here, what is your plan?

The day has finally come when you are about to receive your VCF award. You have waited a long time for this moment, and it can feel like a huge weight has been lifted off your shoulders. Before spending your well-deserved money, we recommend that you meet with a financial advisor. We have all heard horror stories about personal injury victims declaring bankruptcy soon after receiving their awards. It can and does happen. Don’t let it happen to you.

Should you tell others about your award?

We believe it is best to not tell anyone when you receive your award. It is no one else’s business. This money can be both a blessing and a curse depending on the initial steps you take and who you contact. You should keep your finances on a need-to-know basis and those who are not professionally licensed should not be advising you on how to handle your money.We recommend an attorney to review the legal aspects associated with a settlement, an accountant to avoid any potential future tax implications, and a financial advisor to formulate a plan on how to manage the money.

Other Recommendations:

1) Analyze and Pay Off Bad Debts First: Although debts such as mortgages are large and can be intimidating it may not be the best solution to pay off these debts first. Truthfully, it depends on the person and their specific individual needs. In general, some debts are more harmful than others and can limit the growth of your other investments. We call these “bad debts” which have high interest rates and are difficult to pay off when only making minimum payments. Bad debts include personal loans and credit card debt which charge very high interest.

2) Establish a “Rainy Day Fund”: We all know the importance of saving, but how much to save is a question that depends on each individual and their financial situation. We recommend a minimum of 3-6 months of expenses in savings as a “rainy-day” fund. Any more than that is optional, and these funds could better be suited in a long-term investment, or retirement account which if invested appropriately will potentially provide better growth opportunities.

3) Boost Retirement Savings: A VCF award is a new chance to enhance your financial situation. Now that you have some extra tax-free funds in your account, consider:

  • If you are currently employed and your employer has a 401K, 457, 403b, etc. you can boost your contributions Those under 50 may contribute $19,500 (2021) or $20,500 (2022). Those over 50 are allowed an annual “catch-up” contribution of $6,500 creating a year-end total of $26,000 (2021) or $27,000 (2022). This allows you to increase the amount of retirement assets you have without having to pay any taxes on the gains until you withdraw funds.
  • If your employer does not offer a retirement plan, you can still take advantage of retirement savings with an IRA. For those under 50, you can contribute $6,000, and those over 50 are also allowed an annual “catch-up” of $1,000 totaling $7,000 for the year.

4) Invest in Your Family’s Education: For those with kids, family, or relatives that may be exploring higher education there are financial vehicles available that can help you manage future tuition payments. Investments such as 529’s, Coverdell’s, etc. Are all available to help with college expenses and all have unique differences that can better suit your individual needs.

Avoid Headaches and Pitfalls:

5) Do Not Make Rash Decisions: Do not lend money to friends or family until you have a financial plan in place, and ask yourself: “Will it be okay if I don’t ever get this money back?”

6) Be Aware of Business Pitches: When an unexpected sum of money makes its way into your account. don’t be surprised to receive calls from companies, friends and even relatives. Not all these investments and opportunities are in your best interest. If a business pitch sounds “too good to be true”, it probably is.

In Summary:

Your VCF award is well-deserved and if handled correctly can eliminate debt, solve financial hardships and, in some cases, take care of you and your family. However, if not handled correctly it can be a pitfall for those who are unprepared. We recommend consulting a professional such as an attorney, CPA, and Financial Advisor to ensure your path to success and financial security.

Michael Blake is a financial advisor at Merrick Financial Group. If you have any questions, feel free to email him at

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5 replies on “The Importance of Financial Planning: By Michael Blake, Financial Advisor at Merrick Financial Group”

I was captured when you discussed that there are financial mediums available that can help prepare for future tuition fees. It’s good to know since I want to prepare for my children’s higher education. I better hire a financial counselor to guide me through this process.

It got me when you discussed that financial planning allows you to be ready for your kids’ higher education. This got me thinking to start planning for my finances. I should look for a financial planner that can help me deal with financial matters.

Thank you for explaining that you should pay off “bad debts” which include personal loans and credit cards. I’ve been wondering what sorts of things to focus on to get a good handle on my financial planning. I’ll have to follow your advice on this so we can be in a better place when we retire.

My friend wants to make sure that he gets his business put together. It makes sense that he might want to get a financial planner to help out with that. That seems like a good way to ensure that he ends up being able to pay for things properly.

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