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Posted on Jan 4, 2017 | 2 comments

What to do with a windfall

What to do with a windfall

Congrats on your windfall! It’s great when you receive unexpected money.
While your first instinct may be to spend it all on something nice, here are some other ways to make that surprise gift work harder for you.

Have a little fun

Before you choose any (or a combination) of the options below, take some of your windfall and do something fun. Go out to a nice dinner. Purchase that item you’ve been wanting with cash instead of borrowing on credit. Setting aside some of your unexpected cash as “fun money” will help to eliminate any feeling that you never got to enjoy your windfall.

Save it to spend it

If you know you have upcoming expenses, stash away your remaining windfall funds to use later. For example, you could use your windfall to pay for your holiday gifts, a vacation, a replacement appliance, or that home remodel you have been planning to complete. The more you can pay with cash, rather than credit, the more you’ll save in the long run. Plus, you’ll earn dividends if you keep your windfall in a savings account until you need it.

Invest it

Make your money grow. Depending upon the amount and time before you need your windfall, it could make for a great certificate deposit, IRA contribution, or other investment. This is a long-term savings strategy, so if you have any immediate needs, you should consider taking care of those first, especially to help pay down high-priced debt.

Pay off debt

Do you have a credit card balance owed? Want to get ahead on that auto loan? Use your windfall to pay down your loan and credit card balances to save on accumulated interest charges. If you have enough cash to cover the full balance on a credit card, pay the whole thing off and enjoy the relief of no longer making monthly payments. If it’s not quite enough to pay off the balance, then consider putting it toward the line of credit with the highest interest rate. For tips on how to pay down your debt smartly, see

Prepare for emergencies

Depending upon the size of your windfall, you might have enough to cover the average cost of such unexpected expenses as a flat tire, medical co-pays, or other bills. Setting aside your windfall in a special “emergency” savings account can make the difference between using a costly credit card or getting a payday loan with outrageous interest and fees, and being confident that you can handle anything that’s thrown at you. Find a savings account with a high dividend rate so it can earn you some money until you need it.

Pay it forward

If you’re in a strong financial position, then a windfall might be an opportunity to make someone else’s day a little brighter. Consider making a tax-deductible contribution to your favorite non-profit, or help a friend or relative out of a financial crisis. Either way, you’ll feel good about helping others.


  1. I would note on this list that an emergency fund should be the first priority if a person does not have already one. Then debt.

  2. Pay off all debit first. Then save and invest the rest.

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