WHAT IS A WINDFALL?
A windfall is when, sometimes unexpectedly, you find yourself coming into a sum of money. This could be through winning a lottery, an inheritance, legal settlement, etc.
SET IT ASIDE
It can be tempting to take your large sum of money and immediately spend it on something you’ve been eyeing, such a vacation. For the moment, stop, take a beat, and put the money in an easily accessible account, such as savings. This will give you time to make a plan without the temptation of spending it.
EXAMINE FINANCIAL SITUATION
Take stock of what your current financial situation looks like. Are there major debts that you owe? Are your retirement savings on track? Does your tax situation change as a result of this new money? Do you have an emergency savings? Finding your most pressing financial needs can help you draft how to most wisely use this money.
PAY OFF DEBT
Using some of these funds to pay down higher interest rate debts can help save you money in the long run. Make sure you have a strategy when it comes to paying off your debt so you are being as intentional and purposeful as possible.
Depending on the amount you recieve, there may be some room to have a little fun. If you have other responsibilities you need to take care of, such as those listed above, consider capping this amount to be no more than 10% of the total money you recieve. Take advantage of special deals or sales in order to get the most bang for your buck.
REACH OUT FOR HELP
If you aren’t sure where to start, reach out to a financial professional. They can help you make decisions based on what will help you reach your financial goals in the most efficient way possible.