let windfalls jumpstart your goals

May 28th, 2008

Let Windfalls Jumpstart Your Goals

When you’re the recipient of an unexpected windfall, you might have one of two typical reactions. One is to set the windfall aside as “extra” and use it for a big splurge. The other is to absorb it into your normal spending and not really keep track of it specifically, but let it add to whatever budgeting plan you already have set up.

I don’t feel a windfall is an excuse to splurge, but I do ascribe to the first camp in part. I think a windfall should be looked at as extra and kept out of your day to day spending. Too many small windfalls in the past for our family got deposited into our checking account and then never heard from again. Like a raise, we subtly adjusted to lifestyle inflation and absorbed the extra money. But no more. For the past year, our windfalls have been counted and used to make a difference instead of simply keeping us afloat.

Use windfalls to jumpstart your financial goals. Don’t treat it as budgeted money and add it here and there to your budget to pad it for a month or two – make it special and make it count. No matter what your primary financial goal is, use the windfall to jumpstart it. Ours right now is of course debt reduction, but no matter what that goal is, a windfall can give the motivation and ability to achieve yours. Is your goal retirement savings? An emergency fund? Or even a family vacation? We all have our own personal priorities based on where we are in life and what our financial goals are. An influx of a thousand, a few thousand, or even a hundred dollars into your primary financial goal can make it feel that much more achievable, instantly. After all, a windfall is simply a snowflake that grew.

Why do I feel so strongly about this? Because I spent far too long not feeling the rewards of having a windfall happen. Our windfalls somehow just got absorbed into our day to day life and a few months later, it was like it never happened and we had little to show for it. A windfall should feel rewarding, no matter what it is being used for. Reward yourself today with a responsible choice that will kickstart your most important financial goals and put your motivation into overdrive.

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9 Responses to “Let Windfalls Jumpstart Your Goals”

  1. I totally agree and I recommend adopting this view point budgetary wise as well.

    Conservative budgeting can end is small surprises which should be directed to an emergency fund, debt payments or savings.

    That’s the best way to “jump start” your finances.

  2. This is very timely for my family. We just received last week the $100 rebate for a washer and dryer that we purchased (and still owe on) 6 months ago! My original plan for this “windfall” was to direct it straight to the balance of the washer and dryer. As I was looking at the budget for the next two weeks, I was thinking that that $100 would make things a little easier with rising food and gas costs, and was just going to absorb into our checking account. This post made me rethink it, and treat the rebate as us not really having it like we normally would not have. Another little snowflake toward our financial goal of paying off the washer and dryer (and finally being done with that!) Thanks paid twice!

  3. We did this when we started our Freedom account. We did not have enough room in our budget to set aside what we needed each month for those non-regular expenses, so we used several windfalls (tax return, coaches pay) to build up the account until we could properly fund it each month. It is important to have a plan ahead of time or it will get spent, we have probably all done it.

  4. I agree. If you are doing a great job saving, then I can see using a windfall as a chance to get a gift for yourself. But few people fall into this camp. A large windfall, I think should be used for both savings and a nice significant thing you wouldn’t do otherwise (take a trip for a few thousand, buy a brand new large HDTV… whatever would matter to you).

  5. I couldn’t agree more! I have my annual bonus coming next month & a payrise in July.

    While the vast majority will be going straight towards my debts, I’m also taking 50% of my payrise to start saving for a trip to the UK for my 40th birthday next year.

  6. I too agree. I’ve always tried to put sudden windfalls directly into my savings or investments – after all I was doing fine without them so I probably don’t need them now.

    Likewise if my earnings increase I just automatically transfer the extra to a savings or investment account so I never see it.

  7. Brilliant post! I just had my first set of “windfalls” and used to pay down debt, save etc. It’s an amazing feeling!

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