facebook twitter instagram linkedin google youtube vimeo tumblr yelp rss email podcast blog search

How to Handle a Windfall

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.