Many times when people come into a windfall of sudden money, it can be an exhilarating yet scary experience.
Why scary? Maybe just because it’s a new experience. Maybe because additional money creates a chain reaction of decisions to be made. Managing new money can be a chore.
One approach to managing a windfall is to divide the money into four amounts with different purposes. For instance, use a quarter for building emergency cash reserves. Put the money in a savings account. Use another quarter for long time investing and open a brokerage account. Use the third quarter for deferred maintenance. Buy new tires or paint the house! Use the last quarter — for fun things!
This is a simple strategy for managing a windfall. It’s probably too simple a strategy for managing an amount that’s truly life altering like a major inheritance or winning lottery ticket. Dividing a manageable windfall into quarters, however, helps accomplish several financial goals at the same time.