What to Do When You Get Money Unexpectedly

An unexpected bonus at work; a monetary gift from a relative; a check in the mail that you’re not quite sure you deserve, but you’re happy to cash nonetheless… Getting money unexpectedly is like drawing the “Bank Error in Your Favor” card in Monopoly. Now, what to do with it?

If you’re in the unique position of receiving money unexpectedly, whether it’s $500, $5,000, or $50,000, this opportunity can take you down two paths: you can completely squander the money, or you can leverage it.

It’s not too hard to find ways to spend a windfall. As quickly as the money came, it can also disappear. But if you’re looking to get the most out of your unexpected payday, consider walking through these options.

Before You Do Anything

Wait

Before deciding what to do, consider waiting, especially if you received a significant amount of money or if it’s tied to an emotional event. Making major financial decisions in the midst of an emotional time rarely goes well—even if the only thing you’re feeling is excitement over getting the money.

If you weren’t expecting the windfall, then there should be no rush to spend it. If possible, let some time pass and the emotions subside before making any decisions.

Get Some Advice

It’s a good idea to consult someone before spending your money. This can be a tax professional (and should be if there are tax implications), a financial coach, a financial advisor, or a trusted friend or relative. Your plan for your money may make complete sense to you, but someone from the outside looking in will be able to offer insight that you might have missed.

Because some people in your life may be just as (or more) excited as you are for your newly-found money, choose who to seek advice from wisely. Be sure the person has no personal interests in how you spend the money.

First Things First

Set Aside Your Tithe

If you usually tithe (give 10% of your income to your local church or charities), then apply the same principle to money you receive unexpectedly.

Bring Past-Due Bills Current

An excellent use of the money is to bring yourself current if you are late on any of your bills. If what you have received cannot take care of all your past-due amounts, prioritize your housing bills (rent or mortgage and utilities) before moving on to other payments.

Firm Up Your Foundation

Establish or Boost Your Emergency Fund

Your unexpected payday is an excellent opportunity to begin or pad an emergency fund. If you have absolutely nothing set aside for emergencies, consider establishing a “beginner emergency fund” or add to an existing emergency fund enough to cover at least three months of expenses.

Fund Savings For Upcoming Large Purchases

Your windfall could potentially be a good way of taking care of a future large purchase or expense such as an insurance premium, car repair, appliance replacement, college savings, etc. Of course, be sure the expense was on your radar before you received the money. It’s easy to convince yourself that you suddenly need (fill-in-the-blank) simply because you now have the money for it.

Pay Down Debt

Receiving money “out-of-the-blue” can be an opportunity to jumpstart your debt-payoff or to inject some momentum into your existing debt-free journey. Depending on how much money you’re dealing with and how much debt you have, you could potentially get rid of it altogether.

Even if you’re dealing with a just few hundred dollars, it will be a great feeling to make a dent in your debt.

Build on Your Foundation

Address Long-Term Planning

If you’ve covered the basics of getting current on your bills, setting aside money for savings, and addressing your debt, look towards long-term planning such as opening or boosting an existing retirement account followed by investing your money—whether it’s in the stock market, real estate, or a business.

Weigh All Your Options

Trying to decide what to do with money you received unexpectedly is a unique problem to have and can be a chance to put yourself in a better position financially.

While it’s tempting and easy to go the frivolous route, think carefully through all your options, and choose the path that will maximize the impact of your windfall.

Have you ever come into money unexpectedly? How did you handle it?