Five Ways to Make the Most of a Windfall

What would you do with a million dollars?

by Spero Financial

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People love to think and talk about what they’d do with large sums of unexpected money — if they won the lottery or were suddenly gifted a million dollars. Travel the world. Give to charity. Buy a huge house.

Naturally, most windfalls people receive are much more modest, such as the two “extra” paychecks that employees who are paid bi-weekly receive each year, your annual tax return, or extra money at your birthday or the holidays. Whether it’s large or small, don’t waste your next windfall. Instead of blowing through any extra cash that you receive this year, be smart and use the bonus to improve your financial health.

How to Manage Your Windfall

Wait Until You’re Ready

The first thing you should do when you get a windfall is nothing — especially if it’s a large sum of money or if the windfall is the result of an inheritance from a loved one. Let it sit in your personal savings account until you’re ready to manage the money well. Take a few weeks, or even a several months, to get used to your new financial situation. Take your time. The money isn’t going anywhere.

Pause and Reflect

While you’re waiting, you have the perfect opportunity to reflect on your lifestyle and your finances and make sure that any plans you make for your windfall are in line with your financial goals. Don’t have any financial goals outlined yet? Use the time to create some! Money represents opportunity. You will be much happier if you use your extra money to finance your future, further a specific goal, or achieve a life-long dream than if you fritter it away on stuff you can’t remember.

Pay Down Debt

If you’re carrying a credit card balance, consider paying down this debt. The national average credit card interest rate is just over 15 percent. So pay down credit card debt first — with one caveat. If you have no emergency savings, put aside at least $1,000 to fund this account before doing anything else. After all, it makes no sense to pay down your credit cards just to rack up new debt. However, once you have a healthy emergency savings account, pay down those credit cards!

Max Out Your Savings

If you’ve got an emergency savings account and are keeping your credit card balance as close to zero as possible, the next best move to make is to start saving. Fortunately, saving can take many different forms — from the simplest savings account, to longer-term certificates or retirement accounts. There are even specialized savings options — Vacations Savings accounts allow you to save up for a quick getaway, and Christmas Club accounts provide a place to stock up cash funds for the holidays — both of which keep “extra” spending out of your main account. In any case, building up your savings in one way or another is a great way to use extra money, and with interest-bearing accounts can even earn some extra. For more information on the savings options available to you, be sure to contact a specialist, or a financial planner for larger-scale, long-term options available to you.

Splurge — A Little

Just like going on a strict diet and denying yourself all the food that you love can backfire and lead to binging, going on a money diet that’s too severe can lead to impulse buys and overspending if you aren’t careful. So plan to have some fun with your money, too. Putting aside about 10% to 20% of your windfall to treat yourself and your family, whether that means a nice dinner out, a new entertainment center, or a much-needed vacation. Enjoy your unexpected surplus in a way that’s meaningful and memorable for you, because windfalls don’t happen every day.


At Spero, we love to see our members profit and improve their financial lives year after year. If you’ve recently gotten a windfall, talk to one of our specialists today about the best ways to maximize return on your money.

This material is for educational purposes only and is not intended to provide specific advice or recommendations for any individual.

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