Windfalls are unexpected funds that come your way. I’ve never received one of my own, but I have witnessed them happen to people I know over the course of the years. There was the family friend who impulsively bought a lottery ticket and scratched it off to see a $20,000 prize waiting for her. There was the loss of a mother who left her kids with some cash and a paid-off house to sell; there are plenty of people who come into money that they didn’t actually earn, and that’s a windfall. It’s unexpected money; and it sounds amazing.
Unfortunately, many people use that windfall improperly and end up with nothing to show for it. They weren’t expecting it, so they didn’t have much time to think how best to use it, and they end up making impulsive decisions that can ruin their chances of doing something really good with their windfalls. Not that we know whether or not you are getting any in the near future (though it is tax time so we assume many of you will have refunds coming your way), but that won’t stop us from offering you a few pieces of advice to help you use your windfall in a way that’s awesome – not stupid.
Wait it Out
Don’t do anything right away. You don’t have to; it’s your money. Take a few weeks or months or even a year to decide how you want to use those funds and what you want to do with them. The longer you think it through, the wiser your decision will be.
Pay Off Your Debts
If you have credit card debt or student loans, pay them off. Nothing else you do with that money is going to be worth it to you if you still have debt at the end of the day. Pay what you owe and don’t worry about anything else.
Do Something Nice
The thing about windfalls is that you were not expecting that money. Chances are you don’t need it for anything in particular, so while you should invest, save or wisely use the bulk of it, there is no reason you cannot do something nice for yourself, such as take that beach vacation. By indulging just a little bit, you can prevent yourself from feeling as if you are depriving yourself, so you don’t over-indulge later on.