The recession provided a salutary lesson for everyone. It had been extremely tempting to borrow money and lenders were all too happy to approve applications or enroll new clients for their credit cards. The financial environment changed suddenly and unexpectedly. The result was misery for many and few were completely immune from any sort of problem. It is important that everyone takes on board the need to put themselves on a firm financial footing. Borrowing remains a part of everyday life and there is nothing wrong with it as such. That said if you receive a pleasant surprise in terms of unexpected money you should think long and hard about how to spend it. A little treat is fine but it makes sense to think about using it in a positive way.
If you receive a windfall it is certainly sensible to reduce any debt you might have. You will be paying interest on a loan and reducing the amount you pay makes good sense. If some of the debt is on credit cards then the rate of interest charged on outstanding balances is penal. Credit cards are extremely convenient yet extremely dangerous. It is easy to build up core debt by merely paying off the minimum amount per month. Credit cards have often been used to support regular monthly income. It is a fairly obvious point but if that has happened to you, you are probably living beyond your means. While it may not feel as though you have improved your finances by using a windfall to clear a credit card balance you certainly will have.
No one expects recession to return but it still makes sense to have an emergency fund to help with anything from a medical problem to unexpected redundancy. In an ideal world you might think about building up a fund that represents two or three months of your regular outgoings. While there is little interest available on such a fund it will certainly provide you with peace of mind.
If you are fortunate enough not to have any debt then you should consider some sort of investment for at least a part of the money. It is always worth getting financial advice from an independent expert even if you decide against proceeding. There are several possibilities when it comes to investment and each deserves analysis.
You and Your House
In the bigger picture there is your health and retirement both of which may benefit from a cash injection. Perhaps you could do with a full medical or dental work? Have you written your will and have you got life insurance in place? These are things that ensure you are looking after yourself properly. If you have dependents then they are absolutely priorities. It is easy to forget about doing repairs about the house. You may have some structural problem or perhaps need new windows? Something as simple as redecoration can give your property a lift. You can even replace old kitchen appliances using cash rather than requiring finance and the charges involved.
You don’t have to spend your windfall straightaway. You should take your time to consider the ideas described and a little treat should certainly be included. A few days in Las Vegas might be too tempting yet a weekend break is a way to reward yourself. If money has generally been tight it certainly makes sense to give yourself some breathing space as well however. Be certain that anything you buy is something that will really give you pleasure because you may not get the opportunity again to have a little surplus money. There is plenty of choice but spend wisely!