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StitcherLife always takes us by surprise, and every now and then, it blesses us with windfalls. Whether you receive rebates, tax returns, a loved one leaving you an inheritance you didn’t anticipate, or even a stroke of luck in the lottery, these windfalls can leave us both excited and wondering what to do next with them. We will win you over with another rich episode as we guide you in knowing the next wise and most frugal way to manage the money you have unexpectedly received.
Treat a windfall or an influx of cash like you would with the rest of your financial plans.
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- Opt-in for text alerts. You know how stores will ask you to opt in for text alerts when they’re doing sales? and it can be any kind of text alert. The car wash can opt-in text alerts or the Home Depot Outlet Store or the thrift store that will tell you it’s National Thrift Store Day. But you may not need to opt in for any of those text alerts if you get the Friendletter. If you want to get the Friendletter, head to frugalfriendspodcast.com/friendletter. It is like a text from your friend telling you about the greatest deals, but not tempting you to spend money on things you don’t need.
16 Smart Steps To Take When You Receive An Unexpected Financial Windfall
It is only important we keep Forbes’ article in mind when taking smart steps in handling this blessing.
What Jen + Jill have to say:
While it is the last step on the list, Jill believes that treating your unexpected financial windfall is a helpful blueprint for the rest of the article’s listed ways. Treat it as if it were earned and expected. Put it within the framework of your current financial goals. You will definitely have an impulse to treat yourself to recognize and celebrate the reality that you’ve come upon additional money you’ve unexpectedly gotten, and THAT’S GREAT! There’s no need to deprive yourself of something that’s really worth celebrating or honoring. Give yourself a small percentage of it (10%–20%) and invest the rest.
Consider creating a high-yield savings account for it so you don’t confuse it with the money you normally have. Jen highly recommends CIT Bank, which has 4.65% APY. You can look further into this at frugalfriendspodcast.com/CIT. If you haven’t been maxing out your IRA with what you’re bringing in with your salary or work, then this is a great opportunity to max out this IRA. Consult a certified financial planner to make sure the windfall doesn’t put you into a different tax bracket. Remember to put investing and paying off debt at the top of your priority list.
Unexpected Cash Windfall? Don’t Make These 10 Common Financial Mistakes
Let’s not forget not to fall into the common financial mistakes when handed a surprise cash windfall, as listed in this article by Forbes.
What Jen + Jill have to say:
You will pay more when you don’t know what you’re in for. It’s important to talk to your accountant or a CFP to avoid overlooking your tax obligations. There are real tax obligations connected to receiving goods and money. Think thoroughly about what you should do with your money, and do not indulge in financing something that you do not appreciate or spending it as soon as you get a hold of it. Jen noticed that a lot of those who win the lottery spend tons of money that they couldn’t afford before and will most likely not be able to afford in the future— it is a BAD financial move.
Changing your overall spending habits on one-time influxes is a no-no for Jill. Keep your money out of sight and out of mind, so it limits the urge to spend. Not carefully considering a windfall of more than 1% of your income is also a common mistake. Anything over 1% of your income is deserving of extra thought and attention, as this amount of money could make a decent dent in your long-term financial goals.
What would you treat yourself to if you got unexpected money today?
If Jen receives a large amount of unexpected money today, she will have her house renovations finished, and she will choose to travel to Greece. However, if it was a small amount, Jill would invest it right away, and Jen would prefer to go out to a restaurant with her husband.
Have you ever received a windfall or unexpected money? What did you do with it?
One Christmas, Jill’s husband Eric received money from his parents as they decided to sell the ice plant they owned and divided the money among their children. Jill and her husband took a small percentage of the money they received to buy a digital camera (which they now use for their debt payoff series on YouTube!). As for Jen, she cashed out her whole life insurance policy that was from her grandmother (she didn’t know why) to pay down her student loan debt.
Bill of The Week
Thank you Adrienne for sharing your bill about quitting nicotine which allowed you to pay for your dog Fioki’s vet bills!
Thanks so Much for Listening!
Thanks so much for listening! We love love love reading your kind reviews and we especially loved this one:
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Upbeat Advice
Jen and Jill are the perfect duo to not only pull you from your debt ridden slump, but they give you tons of advice to really start fighting your way out of whatever overspending you’ve been doing! Especially if you weren't aware of it. A treat to listen to every week!
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