Most of us dream of winning the lottery or receiving an amazing inheritance from relative you never knew existed.  Most of us can list all of the things we’d buy or do with that money, but the chances of this happening is slim to none!  What does happen to just about everyone, are little financial “windfalls”, or unexpected money added to your income.raining money

Where might this money come from?

  • Cash birthday gifts
  • Tax refunds and/or rebates
  • Employment bonuses
  • Overtime
  • Garage sale profits
  • Refunds from overcharges on a mortgage or escrow account
  • Stock or life insurance dividends
  • Odd jobs & one time project income

Typically when we receive this type of unexpected income, we just absorb it into our checking accounts and spend it – often without really noticing it.  It’s like evaporating water!  Here is how to make the most of financial windfalls, and prevent the evaporation effect:

If You Have Debt Now:

Whenever you receive unexpected income, you should always apply a certain percentage of that unexpected money to your debt.  It may not seem like much, but if you do this every time you “find” money, you’ll be amazed at how quickly it helps you reduce your debts.  Here’s an example of how you could allocate your windfall money:

  • 50% on your largest debt
  • 25% in your savings account or emergency fund
  • 10% to a charity or cause you wish to support
  • 15% towards anything you’ve been wanting to buy or do for entertainment.

If You Are Debt Free:

If you’re debt free, with the exception of a mortgage, here is an example of how you can allocate each financial windfall that comes your way:

  • 40% as an “additional principal” payment on your mortgage
  • 20% into savings, emergency fund, IRA or retirement account
  • 20% towards home improvement and maintenance costs
  • 10% towards charities or causes you want to support
  • 10% entertainment money

Having a plan for all unexpected income will eliminate the typical response to spend it all and wonder where it went, later.  Look over last year’s check register and you will probably see a number of “unexpected financial windfalls” that you just absorbed into your finances without even realizing the impact it made on your financial picture.



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