What Should You Do with the Money from a Personal Injury Settlement?

If you sue someone, then presumably, they harmed you in some way. If you bring a personal injury settlement against a person or entity, perhaps they showed negligence. Maybe a company came out with a product that made you sick, or perhaps someone drove drunk and hit your car.

No matter what a person or entity did, if you get the right lawyer, you can sue them and make them pay. They might settle out of court if their legal counsel tells them they should, or maybe you will win a settlement against them at trial. Either way, you will have money coming your way sooner or later.

Anticipating your personal injury settlement makes sense since you must figure out how you’ll utilize that windfall. Let’s talk about some ways you might use it.

You Can Use It for Medical Expenses and to Cover Lost Wages

You can certainly spend that money frivolously, but you may need it for practical matters first and foremost. For instance, maybe because this person or entity harmed you, you can’t work for a while. Perhaps you’re out of action for months or even years while you’re recovering.

If so, you need that cash because you’re not bringing in a salary. Maybe you can make money some other way while you’re recuperating, but perhaps you’re hurt to the point where you have very few options.

The windfall you get from the trial or the settlement offer can cover doctor appointments, the cost of a surgery, medical supplies or devices, or anything else you need. If you didn’t get a very big settlement, you might spend the money on these things alone. There might not be anything left over afterward.

You Can Use It to Replace Your Car

Let’s use the drunk driver hitting your car scenario for a moment. If that happens, then maybe their insurance covers the damages. It might not cover all of them, though.

If the other driver totaled your car, then maybe their insurance covers part of the repair costs but not the entire amount. The money you get from the drunk driver can make up the difference.

It’s not exactly a fun or glamorous prospect, but you need a working vehicle again. Once you recover, you need that car for work and running errands. Getting the vehicle 100% again should take priority if you’re considering what you might do with that money.

You Can Put It in a Savings Account

You might also take the money from a settlement and open up a savings account with it. Maybe you already have an account, but you didn’t have very much money in it before the accident.

Perhaps you’ll regard your prospects more favorably when you see that money in the bank. You might have that cash as a rainy-day fund. 

If you consider a savings account with an online bank like Ally, you can get favorable interest rates right now because of the economy’s state. The Fed keeps raising interest rates, and having that money collecting interest for you might sound good.

If you ever have an emergency, you might use that money. The next time you have an unexpected medical bill or a car repair, you can use some of the cash you have stashed away.

You Can Start a College Fund

Maybe you have a child or more than one. You anticipate that they’ll graduate high school one day, and you hope they’ll become a college student at that point. You know the opportunities that await college grads.

You can start a college fund with that money. When your child reaches the proper age, you can use the cash for tuition. You can help your young adult take the classes they need so they can have better opportunities during one of their life’s most crucial times.

You Can Make Some Home Improvements

Maybe you’re a homeowner. You saw some home improvements you could do, but you didn’t have the money before.

If you get that windfall, you might investigate which home improvements make the most sense. Maybe you’ll install some new windows. You might do a total tear-off and get a new roof if your old one isn’t in such great condition.

You can do a home energy audit and use spray foam in the basement. That can close off any chinks and cracks through which warm air escapes during the winters.

Any time you improve your home, that’s a good investment. You’re making the house more valuable. If a time ever comes when you decide you’ll move, you can get that money back when you sell the home and get more for it.

You Can Take a Vacation

If you get money through a personal injury settlement, you can do the practical things we mentioned, but maybe you feel like you deserve a break instead. You probably went through a traumatizing ordeal. 

Perhaps you took some time and recovered from an injury or illness, but now that you’re feeling better, you think you deserve a vacation or something else nice for yourself.

You might take that money and spend some time in Hawaii or Tahiti. Maybe you’ll visit a city like London, Paris, or Tokyo. Perhaps Amsterdam or Oslo sounds better.

You might never have a big windfall like this again, and you may feel like you should treat yourself. There’s nothing wrong with that. You deserve some downtime during which you can relax and get yourself in a better headspace.

When you get back, you should feel refreshed. You’ll likely feel you can turn a page now and reclaim your life. The trial probably wasn’t much fun, but now, you can move on from it.

Whether you use that money frivolously or wisely, you should take some and think over this choice. You should involve your family as well. Maybe they have some opinions or ideas that sound reasonable. You should make this a group decision.