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5 Tips for Managing a Financial Windfall

Years ago, I was walking to a restaurant with a couple of friends when I spotted a fifty-dollar bill on the ground. After making sure there wasn’t a distraught individual frantically searching for their missing cash, I pocketed the bill and quickly announced that dinner would be on me. I thought to myself, “I didn’t have to do anything to earn this money. Why not pick up tonight’s check?”

Looking back on the experience, I don’t regret treating myself and my friends to a “free” meal. What I find interesting, though, is how differently I treated that money than I usually would. 

Money in and of itself has clearly defined value. That is to say, the value of money in the marketplace does not change based upon the nature or difficulty of the task performed to acquire the funds.

$50 is worth $50, whether I found it or worked hours to earn it. Nevertheless, in this instance, I wasn’t concerned with how wisely I spent that money because it didn’t take much effort to get it.

But what if it wasn’t just a $50 bill? What if it was $10,000 or $100,000 or $1 million? Would I have the same attitude about a larger chunk of money if I didn’t have to work to get it?

I’m talking about a financial windfall, and the example above illustrates why it’s crucial to have a plan for managing your money if you should suddenly gain more of it. It’s so rare to get money without putting in some effort, so you’ll want to make sure you put that money to good use if you’re ever on the receiving end of a financial windfall.

A financial windfall is simply a sum of money you received that you weren’t expecting. Things such as finding money (such as my story), getting a surprise inheritance, and winning the lottery are all examples of financial windfalls.

What Is a Financial Windfall?

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