Published on November 20th, 2012 | by Pete0
Surprise Cash – What to do when the unexpected happens
Every now and again, things happen that we don’t expect. I didn’t expect to reverse my car into a lamppost the other day, but I did. I didn’t expect that I would lose my wallet on a night out, but I did. (It was later found and returned, minus the cash that was in it!)
Sometimes, unexpected and nice things can happen though. You might have won the lottery, you might have made some money on the horses, or have got a bonus from work, all lovely treats! You might have been given an inheritance (less nice circumstances in this case). However it happens, there may be times when we have money land in our laps that we were not prepared for. So, what can we do with all this lovely surprise cash?
The problem with surprise money is that it can actually panic us into making weird decisions. So, to help make sure you don’t end up with some kind of novelty item (like Captain Kirk’s original uniform) or some unnecessary sports car, here is a list of useful things you can do with the cash, helpfully ordered in a useful priority type order:
Now you might be surprised to see this top of the list, but I think it’s really important. It is surprise money after all, so do something nice with it. Becoming a Money Superstar is a lifestyle choice, but that doesn’t mean that you can’t spend some money on yourself, or your loved ones. I would stress though, that this should only be a small portion of the windfall, perhaps 10% of the total. This might be enough for a pizza, or a weekend away with the family, or a trip to a theme Park. What setting a ‘treat limit’ does do is allow you to enjoy some of the money guilt free, as you can be safe in the knowledge that the majority of the money is working hard to help you transform your finances.
Pay Off Debts
Not the most exciting or fun option I know, but this really is the bread and butter of money superstardom. If you have any personal debts, get rid of them, or at least reduce them. The bonus is that you are increasing your net worth, hence in a funny kind of way making money, and also that normally you can then make recued payments from that point, meaning that it feels like you get a pay rise!
If you are in the fortunate position of already being debt free, you can always save your money. Pop it into an ISA and keep adding to it for a deposit for a new house / car.
If you have the time, inclination and enough surprise money, you could always invest it. Of course there are a number of ways you can do this: the stock market, certain types of savings accounts with banks, but this will of course depend upon how much money you have been landed with and how much time you are willing to wait before you get your hands on a return.
So there we have it, a quick guide to what you can do to avoid stress when money takes you by surprise. Now I’m off to dress up like some kind of Captain…