Many people have gotten or will be getting a windfall payment that they can use to improve their financial security. These windfall payments may be their year-end bonus, an income tax refund, or a lottery payment of an amount that is much larger than they are normally used to getting in their regular paycheck. Although it may be tempting to use the money to splurge on something that could be considered a reward for your hard work or patience through out the year, there are some better ways to get that money to work for you. Here are some smart things to do with any windfall payments that come your way.
Take A Small Chunk For Yourself
Although it is not recommended to spend the majority of your windfall payment on buying something frivolous or unnecessary, there is no harm in taking a small chunk of the payment and using it to treat yourself to something nice. It is important to reward yourself for reaching your goals and showing restraint throughout the year by sticking to your budget. Taking 10% or less of the windfall payment to reward yourself for a job well done is perfectly acceptable as long as the rest of the money is used in a more constructive manner.
Pay Down Credit Card Debt
Credit card debt is some of the most expensive types of debt you can carry. The finance fees and interest charges can add a considerable amount to the balance owed very quickly, making the debt unmanageable. If you are carrying credit card debt, you should do whatever you can to bring down those balances as quickly as possible. A large portion of your windfall payment can be used to pay down your credit card debt or eliminate it completely, which will put you on more secure financial footing for the future.
Boost Your Savings Account
If you are not carrying a large amount of debt, you may want to use your windfall payment to boost the balance of your savings account. Having savings in reserve can provide you with many financial benefits. People that have savings available are less likely to rely on expensive credit cards when facing a financial emergency. People can also use their savings to earn more money, in the form of investments, certificates of deposit, or purchasing bonds with attractive interest rates. Having these savings available in the future can be a financial lifesaver and save you from having to make a difficult decision on how to handle a financial emergency.
Have you received a significant windfall payment recently? What are you planning to do with the money you received? Share your plans with our readers.