What To Do With Windfall Money

Who doesn’t love some windfall money?!

It’s tax season! Not my favorite time of year since I’m self employed and I have to pay in, BUT if you’re expecting a return then you’ll need to decide what to do with that money. I know how tempting it is to spend that money on something fun. The last couple of times my husband has gotten a refund on his taxes, or even if we had gotten any amount of money we would usually save it for travelling. I know this wasn’t the best use of our money so I’ve decided to share with you the way the make the most of your money.

This also applies to any windfall money, including a bonus at work, an inheritance or even a monetary gift!

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What To Do With Surprise Money

1. Pay Off Debt

If you have debt I highly suggest that you put any extra money onto your debt. This will help you pay it off faster and decrease the amount of interest you’ll be paying overall. If you have debt (outside of your mortgage) paying it off should be your #1 priority!

Related Post: Declaring War On Debt

2. Top Up Your Emergency Fund

If your emergency fund is low or non-existent, now is a great time to start saving for emergencies. Having money set aside will help you stop using credit cards every time something unexpected happens.

Related Post: What Is An Emergency Fund

3. Invest

Are your retirement accounts funded regularly? In Canada contributing to your RRSP means that money is tax-deferred. You don’t pay income tax on it now, but you will when you withdraw the money. 35% of Canadian’s aren’t saving for retirement, so if you’re one of them you should start now!

Related Post: Saving For Retirement

4. Save For A Goal

Do you have any renovations you want or need to do? Maybe you’re saving for a house down payment, a new car or a vacation. You could put a boost in your savings account for one or more of these goals with any windfall money.

Related Post: How To Make A Travel Budget

5. Spend It

If all of the above doesn’t apply to you, congratulations! You’ve definitely earned the right to splurge on yourself. I would go for a vacation, or a nice dinner, and also probably hit up the bookstore!

6. Donate It

Kind of a tie with the last one; there are so many causes that could use some funds. We donate monthly to our local food bank, but animal foundations such as the World Wildlife Fund are close to our hearts as well.

Related Post: How To Budget In Giving To Charity