Welcome to The Money Coach, a Times of Malta column where readers can ask questions about life's money issues. Send your questions about personal finances, inheritance, gifting or other personal finance topics to moneycoach@timesofmalta.com. 

Dear Luca,

I've come into a substantial one-time payment of €200,000. Given that I'm in my 60s, this sum needs to be carefully managed to last me for the rest of my life, which is a daunting responsibility.

Currently, my financial life is quite straightforward and modest. I receive an £800 monthly pension and a €400 weekly allowance. Regrettably, I have no other savings.

My monthly expenses include €1,000 for rent and around €400 for utilities and other bills. I've always lived within my means, ensuring that I avoid debt and only spend what I can afford.

One of the most significant aspects of my life right now is my role in caring for four children. This brings with it substantial financial implications and because of this, I am extremely cautious about financial risks. 

I am in good health and lead an active life, but I know that health can be unpredictable and that I need to plan for potential healthcare needs in the future.

I have other, adult children who are all financially independent. 

With these considerations in mind, what should I be thinking of when planning on managing the lump sum I've received? 

My goal is to ensure it supports my living expenses while also providing some potential for growth. Your expertise and suggestions on how to deal with this complex financial landscape would be helpful.

Best regards,

Foster Finance Guardian

Luca responds:

Thank you for sharing your situation. As a money coach, I can provide a hypothetical scenario as an educational example to illustrate how one might consider managing a sum like €200,000, focusing on safety, growth, and responsibility.

A hypothetical financial management scenario:

1. Emergency fund (20%): Allocating a portion of the total sum as an emergency fund is a wise step. This acts as a financial cushion, ready to support in unexpected situations, and avoids the need to dip into other investments or savings during times of need.
2. Conservative investments (40%): Investing in conservative options like high-interest savings accounts, fixed deposits, or low-risk mutual funds can offer a balance between stability and some growth potential. This approach is suitable for those who are cautious, offering a safer harbour against market fluctuations.
3. Education/health fund (20%): Setting aside funds specifically for future educational or health-related needs ensures that dedicated resources are available for these important expenses.
4. Retirement fund (10%): Contributing towards a retirement fund, such as a private pension plan or another retirement savings account, can help secure financial stability in later years.
5. Long-term investment (10%): Directing a portion towards longer-term investments, like a diversified portfolio of stocks and bonds, or a modest real estate investment, aims for potential growth over a longer period.
6. Create a forecast spending plan: Developing a comprehensive spending plan can help everyone manage their monthly expenses and understand where their money is going. Track spending, categorise expenses, and identify opportunities where you can save some money.
7. Estate planning considerations: It’s important to consider how financial decisions will impact the future of one's dependents. Estate planning in this context isn't just about leaving a legacy; it's about ensuring that dependents are well taken care of.
8. Seek personalised guidance: Consulting with a professional who can offer personalised guidance is advisable for complex situations. They can provide insights tailored to specific situations, risk tolerance, and long-term goals.

This scenario is a starting point and should be adapted to fit unique circumstances. Effective financial management involves informed decision-making, staying true to one's comfort with risk, and continuously reassessing the plan to ensure it aligns with changing life circumstances.

Luca is the founder of the Money Coaching Hub. Email him your financial questions at moneycoach@timesofmalta.com

Disclaimer: This column is intended to provide general information on various topics related to personal finance. The information provided is for educational purposes only and should not be construed as personalised financial advice for your specific situation. Financial decisions are highly individual and can vary greatly based on your unique circumstances, goals, and risk tolerance. The author of this column is not authorised to provide financial advice. Before making any financial decisions, it is recommended to seek professional financial advice from an authorised financial advisor.