Windfall

When we come into money very fast we tend to spend it much faster then if it was in our wages. Right now being tax refunds for some of us. This needs to be reconsidered. First off we need to make sure that we can live our daily life's. Then we need to make sure our retirement fund is funded. We don't need that new TV or iPad. When it comes to a tax refund. Our wages were over withheld. We should have had that money in the first place.

When we win big gambling. Did we really win big? I mean that in a sense of over the long haul are we up big gambling? Is this going to fund our next gambling trip? I suggest tracking your gambling winning and losses. Don't estimate what you've done in the past. Start today as you're at zero. Start an excel worksheet.

Inheritance is a hard thing to go over. When ever people talk about inheriting items they always seem to talk gross. There are a lot of expenses involved in inheriting money. Let say you inherit a house, cash, and or items worth $10,000. Don't go out and spend it all. Whether it be a car or a motor home. Look at your finances first. Maybe the hourse cost $150,000 split in 1/3. Your not going to walk away with $50,000. When you go out and buy $50,000 vehicle because of this inheritance you're going to be tapping into other money leaving you worse then you were.

After some windfalls a lot of people end up spending more then what they received. Maybe you won $75 and end up spending $150 celebrating. If you want to celebrate take the money in cash for how much you won. The conventional wisdom is to save 97% of the windfall. If you're going to spend more then that make sure you hold it in cash. If it's a lot of money make sure you have 3 months of savings available before you spend it. It doesn't all need to go to three months of savings, but you should at least partially fund it. If you're behind in your retirement put the money there.

Finally receiving payment from someone is not a windfall. I have made the decision to loan out money to my parents before. Not something I plan to do again. At least not to the people that I did. When I finally did receive some of it. It kind of did feel like a windfall. It's not though. That money was hard earned. Payment for working extra can fund that item that you want though. If you pick up an extra part time gig to buy something then spoil yourself.

Make a plan to what you're going to do with your large one time income. I've made the mistake of saying in my head well I won at the casino this is fine. It turns into rough estimates and telling myself I can spend $50 multiple times for winning $50 one time.