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Don't Forget to Plan for “Windfall” Money


A financial windfall is an unexpected, unearned, or sudden gain or advantage. When people are trying to create household budgets, most of the time they fail to plan for windfalls – but we all experience them from time to time. A windfall of any amount can make a difference to your savings plans, but only if you have a method for dealing with windfalls in place before you receive them.

Think about what usually happens to unexpected money you receive... maybe your Aunt Bertha sends you a birthday card with a crisp $20 bill; or the scratch-offs in your Christmas stocking reveals $50 winnings. Regardless of where this extra cash comes from, most of the time we add this money to our primary bank accounts and absorb it into our every day spending – or worse, we put the cash in our wallets and use it here and there with no plan of action.

Throughout the course of the year, if you always do this with your “windfall” money, you are probably wasting away a few hundred dollars without even realizing it. In order to take advantage of these unexpected financial gains – you should create a plan for the money before you receive it.

Basically, to plan for money you don't know when you'll receive or how much it will be, you'll want to decide whether you want to save 100% of whatever-the-amount is, or if you want to break up the amount into different categories of spending or savings. For example, you might say:

  • 50% of all windfall money goes toward debt repayment,
  • 40% is saved,
  • 10% is money for pleasure (spending money)

You can create percentages and categories that work for you – but the key is to stick to the categories and percentages you create regardless of how small or large your windfall money is. Keep track of all windfall money for a year to see just how much money you would have used without realizing it in the course of a year – you'll be happy you created a windfall plan and put that money to more practical use.