5 Tips for Managing a Financial Windfall

What is a Financial Windfall?

A financial windfall is simply a sum of money you received that you weren’t expecting. Things such as finding money, getting a surprise inheritance, and winning the lottery are all examples of financial windfalls.

Easy Come, Easy Go: “The Dollar on the Ground Mentality”

Here are a few examples of financial windfalls that come to mind: 1. You receive a $50k inheritance when a relative passes away unexpectedly. 2. You get a $300 credit card sign-up bonus. 3. You and your spouse receive wedding gifts totaling $5,000 cash

Tips for Managing a Financial Windfall

When we come upon money that did not require the requisite 40-hour workweek, it becomes tempting to treat it like it’s entirely disposable.  Here are some tips for managing a financial windfall so that you’ll be putting that unexpected blessing to good use.

Acknowledge the Temptation to Spend and Wait

One method you can use when you receive surprise money is to develop a system where you aren’t allowed to do anything with the funds for a specified amount of time. If you receive a few hundred dollars, for example, you might wait two weeks. If you received a few thousand dollars, you might wait four weeks.

Put It in Your Savings, Invest It, or Pay Off Debt

You should opt to put your financial windfall in your savings, invest it, or use it to pay off debt. The option you choose depends entirely on your financial situation, but you can always spread your financial windfall between all three.

Mark a Portion of the Financial Windfall as “Fun Money”

As mentioned earlier, spending money isn’t necessarily bad, and there are things that you should spend money on while you try to improve your finances. So, you should consider using a portion of your surprise money as “fun money.”

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