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What Should I Do with the Money I Receive from My Injury Claim?

Celebrating the resolution of your personal injury claim is a moment of relief and hope. Once you receive your settlement check, you might wonder how to use the money to set yourself up for a secure financial future.

Learn how to manage your settlement funds effectively, from covering medical expenses to making home upgrades to ensure a positive impact on your life following the accident.

Understanding Your Personal Injury Claim Award

The bulk of your personal injury claim settlement will likely cover economic damages. These funds compensate for the financial impacts you’ve experienced, such as medical expenses and lost earnings.

However, there are two important responsibilities you need to take care of as soon as you are awarded your settlement:

  • Settling attorney’s fees: Before you receive the remaining amount of your settlement, your attorney will subtract their contingency fee as per your agreement. This fee compensates your lawyer for their time on your case, court costs, legal research, and expenses related to expert testimonies.
  • Paying off medical liens: This step requires reimbursing the medical providers and insurance companies that paid for your initial treatment. Resolving these liens ensures that the involved parties are compensated for the care they provided, fulfilling your legal obligations, and addressing any healthcare-related debts.

What to do With the Remaining Portion of Your Settlement?

With the remaining settlement funds, you can address immediate expenses, such as outstanding medical bills and essential living costs. This step alleviates financial pressures, allowing you to focus on recovery and daily life with greater peace of mind.

  • Set aside a portion for taxes. Most of your personal injury settlement is tax-free, covering medical bills and lost wages. However, some exceptions, like punitive damages, may be taxable. Consult a tax professional to help you understand your tax liability so you can set aside the funds before planning to use the rest of your settlement.
  • Pay additional medical expenses. Use settlement funds to cover your injury’s ongoing or future medical fees. This includes treatment and rehabilitation that may not have been initially covered. Prompt payment helps avoid accumulating medical debts.
  • Use it for daily living expenses while out of work. If your injury affects your employment, allocate part of the settlement to cover everyday living costs. This can include rent, groceries, and utilities, helping you remain financially stable during your recovery.
  • Transportation expenses. Use your settlement funds for transportation costs if your vehicle was damaged in a personal injury accident. This may include renting a car or using public transportation to meet your travel needs for work, school, medical visits, or dependent care.

Non-Economic Damages: Investing in Your Future

Settlements often include compensation for non-economic damages like pain and suffering. While it might be tempting to spend this money on immediate gratifications, consider investing it in ways that will help in your long-term recovery and quality of life, including:

  • Investments: Explore investment opportunities that can help you grow your settlement funds over time. This may include stocks, bonds, or other financial investments. Investing wisely can secure your financial future and provide stability for yourself and your loved ones.
  • Home modifications: Consider using the funds for home modifications if your injury leaves you with a disability. This can include installing ramps, modifying bathrooms, or other changes that make your living space more accessible and comfortable.
  • Self-care and rehabilitation: Invest in your physical and mental well-being to cope with the lifestyle changes caused by your injury. Spend some funds on physical therapy, counseling, or activities that support your recovery and mental health.
  • Education and career development: Put part of your settlement toward education or training, especially if your injury affects your ability to return to your previous job. Investing in new skills can open doors to different career paths, helping you regain independence after an accident.
  • Start an emergency fund: Allocate a portion of your settlement to create an emergency fund. Determine the amount to set aside, typically 3 to 6 months’ worth of expenses, and put the funds in a savings account. Only use the fund for emergencies like medical bills or unforeseen expenses.

Consult a Personal Injury Attorney Today

A fair settlement after an accident injury is critical to safeguarding your financial future. Contact a Wisconsin personal injury lawyer at Brian Hodgkiss Injury Lawyers for a free case review and learn how we can help you get compensation for your injuries.

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