We often get the majority of our income from our full-time work. We get paid and then we budget this money accordingly based on our expenses and financial goals. Once in a while an extra bill comes in and we must figure out how to cover this new expense. We eventually decide on how to deal with this new expense and we move on. Then there’s the flip side to this. We’ll occasionally get a financial windfall– unexpected money comes in or money comes in that you didn’t actively seek out. Today I wanted to discuss the idea of how you can handle a windfall.
Where do financial windfalls usually come from?
- Income tax returns.
- Bonus at work.
- Unexpected source of income.
I’m sure there’s other ways that you can find yourself with a financial windfall, but these are just the most common options for how you can run into some easy cash.
What’s the most popular way of spending a financial windfall?
Let’s be perfectly honest. When we work for our money we tend to treat it with a little more respect. When money comes to us easily and unexpectedly, the natural reaction is to treat ourselves by spending this money. You know, you can go out and buy drinks all night. You can buy the new iPad. You can buy a new pair of shades for the summer. The options are literally endless. It’s really easy to spend this “free money” in a blink of an eye without making a conscious decision. I’m not saying that there’s anything inherently wrong with this idea, but there are other ways to spend a financial windfall that could be more beneficial.
What are some practical ways to deal with a money windfall?
- Pay down debt.
- Put the money in a savings account.
- Invest the money.
How do I handle financial windfalls?
Whenever I come into any money unexpectedly I have an easy system for dealing with this new found cash. I take a majority of the money (no real set percentage) and save it in my online savings account with ING Direct. Then I take a piece of this money and do something really fun. What’s likely fun for me isn’t fun for everyone. It usually involves going out and just blowing this piece of the money without much thought. The reason that this works for me is because I see my bottom line grow and I managed to have some unexpected fun.
Now it’s time to ask the readers: how do you guys handle financial windfalls? What do you do with this new found money? Please share with us.