Don’t you just love free money? Me too! A money windfall is like a little (or large) gift from above; coming at the perfect time. Whether it’s an inheritance, a tax refund, or a bonus from work, a windfall is always welcome.
How To Budget A Windfall
Here’s the thing though: we always use it wrong. Yup, I said wrong. No, you aren’t supposed to spend it all in less than 5 minutes. Shocker, right? This is not a game show, it’s your real life. In this post, I’m going to share how to budget a money windfall, so you can attract even more windfalls in the future.
Treat Like Income
Use your regular budgeting system for your windfall. Treat the windfall amount as an extra take-home payment, and use the percentages within your budgeting system to allot the money to the proper bills and savings.
Get Ahead On Bills
If you are behind on bills, loathe paying a certain bill, or are trying to become debt-free, this is the perfect time to get ahead or catch up. Use this opportunity to become current, or to give a big amount to your debt collectors. This is a great time to give yourself peace of mind.
Double Check Tax Requirements
Depending on the state, you may be taxed on specific money windfalls. Inheritances, severance pay, trusts, and bonuses from work may be taxed. If you do have to pay taxes on them, be sure to set that money aside in the income above.
Budget A Splurge
Yes, I said splurge! But, I also said to budget that splurge. Doing step number 1, you’ll be able to see all the places where your splurge money will come from in the budget. From the entertainment line, to the fun money line, you will have money that is set aside just for splurging. What’s the point of getting a windfall, if you can’t have a little fun?
This won’t be too difficult to do, if giving and tithing is already part of your budget system. You’ve been given in abundance, so you have to pay it forward. Tithing should be set aside during money windfalls, as well as a good donation to your favorite charities. Give back so you can attract more.
Are you down to do all of these things when you get your next money windfall? If not, what are the steps you take when you get a windfall? Let us know below.