Make the Most of Your Windfall

Life is full of surprises, and sometimes those surprises come in the form of a windfall—a sudden sum of money that might leave you feeling both thrilled and overwhelmed. Whether it’s an inheritance, a surprise bonus, the sale of a property, or an unexpected gift, receiving a large amount of money can be both exciting and daunting. So, what do you do with it? How do you make the most of it while ensuring your financial security and peace of mind?

Here’s the thing: How you handle a windfall largely depends on your goals, your life stage, and, of course, the amount. But regardless of whether it’s a small bonus or a life-changing inheritance, one thing is certain: You’ve got a unique opportunity to reshape your financial future. Let’s break it down.

Money bills fall around a red apple on grass with a text box explaining the term "windfall" as unexpected fruit or money gain.

What To Do With a Windfall Step by Step

1. First Things First: Stay Calm and Avoid Rushing

Middle aged woman wearing a black jacket looks pensively to the side. Soft focus background with green foliage.

When a sudden windfall hits, it’s easy to get swept up in the excitement. You might have a list of things you want to buy—perhaps a dream vacation, a new car, or home renovations. But before you jump in, take a moment to breathe. Take a few days, or even weeks, to think through your options. Rushing into decisions can lead to regrets, so take time to assess your needs, goals, and priorities.

2. Pay Down Debt (It’s Always a Smart Move)

If you have debt, one of the smartest first steps is to use part of your windfall to pay it down. It may not sound glamorous, but trust me, the peace of mind you’ll get from clearing your debt is priceless. Start with high-interest debt like credit cards or payday loans, and then consider paying down your mortgage or car loan if possible.

Close-up of a blank check with a patterned background. A silver pen is poised over the dollar amount section, suggesting readiness to write.

Example: Let’s say you’ve received a $15,000 windfall. If you have $5,000 in credit card debt, it might make sense to pay that off right away. The interest savings alone could make a huge difference over time, and you'll free up cash flow for future investments or goals.

3. Build or Bolster Your Emergency Fund

Having a financial cushion is more important than ever as we get older. Medical bills, home repairs, or unexpected job changes are all part of life. A solid emergency fund helps you weather these storms without derailing your financial stability.

A person hammering shingles on a black roof. An electric tool is nearby. The blue background contrasts with the dark roof, creating focus.

Example: If you’re over 40, you might already be in a position where you have an emergency fund, but if it’s a bit thin, consider adding to it. Aim for at least 3 to 6 months' worth of living expenses. If your monthly expenses are around $3,000, putting away $9,000 to $18,000 should be your goal. If your windfall is $20,000, that’s a great start!

4. Invest in Your Future: Retirement Funds and Long-Term Growth

Retirement may feel far away, but the truth is, the sooner you invest for the future, the better. If you’re receiving a windfall, now’s the perfect time to consider contributing to retirement accounts like an IRA or 401(k) if you're eligible. Remember, time in the market generally works in your favor, and compounded growth is a powerful tool.

Man in office smiling at desk with laptop, multiple screens showing graphs. Bright setting, green plant nearby. Positive and focused mood.

Example: Let’s say you get a $50,000 windfall. While you might feel tempted to splurge, putting a portion of that into a retirement account could dramatically improve your financial situation later. If you add $20,000 to your 401(k), that contribution might grow into $100,000 or more over the next 20 years, depending on your investment choices.

5. Think About Major Life Goals

This is where things get personal. Have you been thinking about starting a business or perhaps owning some investment properties? A windfall can provide the breathing room you need to invest in yourself and your dreams. Maybe it’s time to launch that business you’ve always dreamed about or to look at a vacation home you can own and rent out when you’re not using it.

Start by defining your short-term and long-term financial goals. Savings for short-term goals like purchasing a car, home renovations, or family vacation should be placed in low-risk easily accessible investments such as money market funds, high-yield savings accounts, or short-term bonds. For long-term goals, you can take on more risk (and potential reward!) with investments like stocks or exchange-traded funds (ETFs) in a brokerage account. You can invest the entire balance all at once, diversifying across different companies or asset classes. Some investors prefer dollar-cost averaging, which just means spreading out their investments over a period of time to avoid the risk of jumping into the market at the wrong moment.

Gray haired woman in a suit gestures at a world map on a screen, presenting in an office. Glasses and watch visible, modern decor.

Example: Let’s say you’ve received $35,000 from a family inheritance and you’ve been dreaming of starting a consulting business. Consider using the inheritance to make that leap to self-employment with less financial stress. Or perhaps you’ve been dreaming of ways to leave a monetary legacy for your family, so you start a brokerage account to grow the inheritance to bless future family generations.

6. Treat Yourself (But Wisely)

A smiling couple in white robes holds wine glasses on a balcony against a blue sky background, exuding happiness and relaxation.

This one is really important to us at Convergent Financial Group. You will see we often say, “Guiding you from providing to thriving without sacrificing all the fun in today." While it’s important to be responsible with money, that doesn’t mean you can’t indulge responsibly along the way. Occasionally, you deserve a little reward. Whether it’s a vacation, a new car, or a small luxury item, enjoy the fruits of your labor in a balanced way.

Example: If you receive $10,000, think about using $2,000 to treat yourself to something meaningful—a vacation to a destination you’ve always wanted to visit, a small home improvement project, or perhaps a luxury item like a classic designer handbag that you’ll enjoy for years.

7. Consider Giving Back

Windfalls can also provide an opportunity to give back to others. Whether it’s donating to a church or charity you care about, supporting family members in need, or leaving a legacy, using part of your windfall for others can be incredibly fulfilling. It’s a chance to make a positive impact on your community or a cause that resonates with you.

Graduate in cap and gown holds diploma aloft under a bright sky, sunlit clouds in the background, symbolizing achievement and optimism.

Example: Let’s say you’ve received $100,000 from the sale of a property. After taking care of your personal financial goals, you might decide to set aside $10,000 to donate to a local church or to start a scholarship fund for students who struggle to afford college tuition.

8. Work with a Financial Advisor

Man in suit smiling, talking on phone, writing notes at desk with computer and coffee. Office setting, plants in background.

If your windfall is more substantial, or if you’re unsure how to handle it, working with a financial advisor can help you navigate your options. A fiduciary advisor will help you understand tax implications, create a tailored investment strategy that is best suited for you, and ensure your long-term financial health. It’s especially important to get professional advice if the windfall comes with complications, like tax issues or if you’re dealing with a large sum of money. Start by meeting with a few advisors to ensure that you choose one that is the right fit for you. (If you would like to start with me, you can schedule your first meeting here.)

The Bottom Line

A windfall is more than just a sudden influx of cash—it’s an opportunity to make meaningful changes in your financial life. Whether it’s paying down debt, investing in your future, or treating yourself to something special, how you handle your windfall can have a lasting impact. The key is to stay calm, be strategic, and make sure that you’re aligning your decisions with your personal goals.

Remember, it’s not about the amount of money—it’s about what you do with it. Whether you get a few thousand dollars or a significant sum, your choices now can help shape a secure and fulfilling future.

If you have any questions about your specific situation, feel free to email or call me… I truly enjoy strategizing about money to help people reach their goals!

Sincerely,