Home Save Money Saving Money: How to Make the Most of a Financial Windfall

Saving Money: How to Make the Most of a Financial Windfall

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Inheritance. Lottery. Huge casino winnings. Some people get the chance of a huge financial windfall, but, almost 70%, instead of saving money, will squander it.

How can someone miss the HUGE opportunity of getting set for life? How can someone lose all this money recklessly and then get back to square one?

Find out how you can properly manage a big windfall and make the most of your money.

1. Keep the leeches away from your money

Leeches are those people (we all know them), who instantly seem to remember you, as soon as you came into money. Distant relatives, old friends you stopped keeping in touch.

You don’t owe them a chunk of your money, so try to be as discreet as possible. If they still find out about your amazing luck, make sure to let them know that their kids’ college funds, their medical bills and their mortgages (or whatever ‘needs‘ they’d like you to solve) are their problems and not yours.

Unless you clearly plan to set a portion for charity (donations or helping some of them), the money is YOURS to use it.

Just try to remember how many of said friends came to you with ‘gifts‘, when they had something great happen in their lives. Not too many … right?

2. Get out of debt if possible

Debt – this is the biggest problem for many people nowadays and probably the best one to get solved, now that you have some funds available.

Use at least a part of your money (or entirely, if the windfall is not that huge) to pay off debt. Even if the money can’t cover it all, it will set you WAY ahead in your debt payment journey.

It’s a pity to squander your fortune and still owe money, when your financial windfall can help so much with clearing debt.

3. Solve any other problem that cannot wait

Say a medical situation that really needs your attention. Or a purchase that would help your family tremendously. Nope, a huge TV screen is not such thing 🙂

Kidding aside, if there is something you do need to pay for, it’s a good moment to let your financial windfall work for you. I’d probably pay for some medical issues I’d like resolved and also purchase a home in an area that we’ve been dreaming for years to move in.

4. Set yourself for retirement

You might not want to quit working entirely (many of us are running nice relaxing businesses and wouldn’t consider retiring completely for many years to come). But you need to think about saving money for retirement.

Even if there’s not a lot of money to be saved, anything matters and helps. In my case, I’d be interested in saving money for our ‘golden’ years, even if at least one of us will continue to be involved in various side-hustles.

I am a workaholic after all and, even if I can spend 2-3 days away from my web design ’empire’, afterwards I feel the need to do some work.

Anyway, no matter what happens in the future, at this moment, you’ll have less worries than before, with debt being paid off, big problems taken care of and your retirement looking better by the day.

4. Make your money work for itself

You might be employed and hate your job. Or love it. Or you’re running your own small / bigger business.

My next move would be to make sure that my fortune grows. I can’t imagine just spending my money left and right and not trying to do anything that would earn me money in the future.

Maybe you’ll start an easy to handle business, that will earn you revenue. Maybe you’ll invest wisely some of the money. Learn as much as you can about finances, hire the right people to show you the ropes and take it to the next level. This step can really make the difference for you and your family.

5. Indulge a little

Saving money after a windfall is pretty difficult, because most of us lack the discipline. And, even if we do have it, just doing the ‘right’ thing gets boring.

So, you’ll need to also let go and learn how to relax.

And this is where you can make a difference: by indulging in a responsible manner (set aside 3-5% of the money for instance), or squander it all.

At this stage you can make a purchase or go to a trip, just because you need to celebrate. Once you have your future so well planned for and the money wisely saved/invested, splurging a little won’t harm you.

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Have you come into any unexpected money? What was your plan to make your money work for you?

10 COMMENTS

  1. I’d say financial education is very important in this case. I don’t think anyone is really prepared to become rich overnight. I always say that if it ever happened to me, I’d do this and that, but subconsciously, I don’t think it will ever happen. However, I do agree with everything you said, even if indulging a little might just be the first thing on my list! 😛

  2. I did experience a few windfalls back when I was still working. There are times when the company would reward every employee with bonuses because of good overall performance.

    My initial response upon receiving a windfall was to go buy something for myself. On a whim, I bought an expensive watch. I was able to use it on a few occasions, however, it just didn’t seem practical to use it daily (considering the price). I thought to myself, if I had another windfall, I would definitely invest it. And that what I did when I received a bonus. Since then, I never regret that decision.

  3. If I ever win the lottery or inherit lots of money, I already have a good plan in place: I’m starting my own business! I think that’s the smartest choice of all, make the money work for you and double it, triple it, quadruple it! 🙂

  4. It’s nice to dream about a financial windfall. I often fall asleep thinking about what would I do if it happened to me. Then I wake up and I’m poor again 😀
    In any case, your ideas are great! The only problem is, you may not be able to put all of them into practice. Unless you inherit millions of dollars, it’s gonna be difficult!

    • I get those types of dreams of too, and then there are even times when I would welcome one, but that is a whole other story. The fixes are really something that you just have to adjust to yourself and your own capabilities and what works for you. Best to be safe, but must be logical as well.

  5. Oh the blessing and temptation of a windfall! I can’t remember ever receiving a huge windfall. I wish I could have one right now. It could definitely help in some ways. There was once that I received an unexpected money, it was just around $400. I remembered receiving it when I was 24 years old. At that time, I didn’t know anything about personal finance, so yeah I squander it ALL in a jiffy. I wish I had known then what I know now (13 years later), I could have opened my stock market account then. While the amount may not that big, I could just imagine the money it could have earned in the 13 years it could have been invested in the stock market.
    tabby recently posted…Philippine Stock market Performance a Day after the May 9 Presidential ElectionsMy Profile

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