Whether it is a tax refund, a lottery win or an inheritance, a sudden increase in funds can be both a blessing and a curse. If you have been in debt but have not taken the time to evaluate your habits, an unexpected increase in your checking account could cause a number of problems.
Surprise, you’ve won! What do you do first?
If you have a history of impulse spending, the first thing you need to do is put that money into your bank account and step away from the cash.
Take the time to really think about the best way to spend or invest the money. Make a list of what needs to be paid and in what order. Also make an additional list of items you want. Consider this list for some time before you act.
Step away from the mall!
It is very important to ignore the desire to spend frivolously. This is not to say that a little something for yourself is bad. It is so easy to go over board when you are out shopping and nothing ruins a sudden windfall than not knowing where the money went.
Prioritize! Prioritize! Prioritize!
Once you are ready to move some money, make sure you have your priorities in place. Are you thinking clearly? Are you being honest with your needs and wants? Prioritize with a level head and a clear conscience.
If you are in debt, your priority should be an emergency fund first and then paying off debt. If you’re debt free then the money should be in an emergency fund, a retirement account or invested into your 401K. If you are anticipating a large expenditure and this money could help then the money would be best in a savings account.
I am a firm believer in the occasional splurge. If you are still paying off debt then the splurge needs to be very small, maybe just a manicure, a new pair of shoes or a video game for your game system. The key is to keep it to a minimum if you are still working on paying off debt.
“Check yourself before you wreck yourself!”
When a sudden windfall ends up in your hands, it’s extremely important to keep your self in line. Be very cognizant of how you are thinking of your money. Use mindful spending.
Whether you have won money, made a wise investment or suffered the lost of a loved one, wasting a windfall by over-spending on impulse buys dishonors the money and those that it came from.