Financial Windfalls
What it is
Written by R. A. Stewart
A windfall is a large amount of money you didn’t expect to receive. It could be $200, $1000, and more. It is an amount of money which was not budgeted for because it arrived unexpectedly. Unless you have mastered the art of financial discipline there is a risk that this good fortune will be frittered away with no improvement in your financial situation. It is important therefore that you have a plan for any unexpected cash that comes your way. In this article I will take a look at some of the more common forms of windfall and explain how best to take advantage of them.
Types of Windfalls
There are various types of windfalls, they could be:
An Inland Revenue refund
An inheritance of money or property
Lottery winnings
Gift from a rich relative
Life insurance payout
Employee bonus
These are just some of the kinds of unexpected windfalls one may receive during their lifetime. It is important not to pin all of your hopes of a financial miracle on a windfall if you are in some kind of financial mess. There is no substitute for diligence. Most of the windfalls are the result of living a responsible, diligent life; for example you are not going to receive a tax refund or an employee bonus if you are not working.
As for a lottery win; one must understand that for every one that gains a windfall in this way, there are many thousands who do not. It is a case of thousands contributing money into the pool but only a few taking out. This is luck! The amount of money lost by each individual lottery player is equal or in most cases greater than what one considers a large windfall.
How to take advantage of a windfalls
Gaining a windfall is one thing but taking advantage of it is another. People who come into a sum of money unexpectedly will follow the same pattern of behavior with any windfall as they do when they receive their pay packet…
Those who are spenders will spend it, those who are savers will save it, and those who are investors will invest it.
The end result will be that they will be in the same financial position as they were before they received their windfall.
Is a Financial Windfall Discretionary Spending Money?
That all depends on your personal financial situation.
The answer is “No” if…
You have consumer debt.
You have credit card debt.
You have a student loan to pay back.
You have some other debt.
Even a mortgage.
The answer is “Yes” if…
You have absolutely no debt.
Money obtained from a financial windfall is discretionary spending money if you have no debt but that does not mean that you should just go and fritter it all away. Windfall money can be used to strengthen an already solid financial situation. One way you can do this is make voluntary deposits into your retirement fund or to put it toward your emergency fund.
About this article
This article is of the opinion of the writer and may not be applicable to your personal circumstances therefore, discretion is advised.
www.robertastewart.com
