Receiving a windfall of money can be an unexpected but welcome surprise. Few may complain about suddenly coming into a surplus of cash, and even less may struggle to spend those funds, but that doesn’t mean some suggestions on how to use that money wisely wouldn’t be useful.
Whether your cash windfall comes in the form of a tax refund, an inheritance, or even a lottery win, how you choose to use that money could significantly impact your financial situation. Here are a few ways to consider using those funds that could help you reach some financial goals.
Build an Emergency Fund
Creating or contributing to an emergency fund is a crucial way to ensure your finances aren’t wrecked in the case of an emergency. Likewise, it may be wise for you to take a closer look at how much you have saved in your emergency fund and determine whether or not that amount still fits your current needs.
If you don’t yet have an emergency fund, you may want to use your cash windfall to start one. And if you already have one, you may want to consider using some of your windfall to build upon those savings.
Invest
Another option to make the most of your sudden windfall is to invest it. Well seasoned investors often find value in using extra funds to expand and diversify their portfolios . If you’re completely new to investing, you may want to check out some resources for investing beginners online.
Start a Side Hustle
What better way to make your money work for you than by using it to invest in a new income stream? You could use your windfall to help your hobby bring in some extra cash, develop a lucrative side hustle in tech or even create an entire business or LLC .
Having a side hustle or your own full-fledged business can be stressful, especially as you get your new income stream started. However, investing money now in a side hustle or business could help you make some serious cash down the line over time.
Develop Your Professional Skills
Not quite ready to start a side hustle? You may want to consider investing some of your cash into your current job. Learning a new skill could help you advance in your career, earning you a hard-earned raise or even a promotion.
Thinking about a career change? It may be wise to invest in a career counselor who can help you navigate your next steps. You may even want to go back to school to earn an MBA or other advanced degree. This could potentially open doors toward a promotion at work or even finding a higher-paying job.
Buy Something Special
Do you have an unusually large expense coming up? Your money windfall could help you offset some of those costs. For instance, if you’re planning a wedding , you could use your newly found cash to avoid having to take out wedding loans or use the money to upgrade your plans, such as switching to a more expensive venue. Similarly, you could use that cash to go on a vacation or make some fancy hotel and excursion upgrades to an existing trip.
If you’re buying a house or are in the market for one, having extra cash on hand could help you afford your dream home. Depending on how much your windfall is, it could be used to increase your down payment or put toward after-purchase renovations.
Around the Web
Need more ideas on how to use your money windfall? Here are some tips from experts that we gathered from around the web:
• 7 Smart Ways to Invest Extra Money
• 11 Powerful Money Moves to Make With Your Tax Refund
• What Should A Business Do With Extra Cash?
• The Best Problem: 5 Things You Can Do With Excess Cash
The Takeaway
After the initial excitement of a money windfall wears off, your options for how best to use that cash may feel overwhelming. It may be best to take some time to review your finances as they stand, your financial goals, and prioritize your financial wants and needs from there. Then, you can have a better perspective of how best to make your money windfall work for you.
Want some help managing your sudden surge of income? SoFi Insights is a budgeting app that can track your cash, set up financial goals, and help you keep tabs on your spending.
Learn more about how SoFi Insights can work for you.
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Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.
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