June 18th, 2012
What To Do With “Windfall” Cash
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**Today’s guest post is contributed by Megan Taylor.**
No matter how little I’ve had, there have always been times in my life when I’ll find myself with a little extra cash. The strangest was a literal “Pay it forward” moment in college when a guy in a business suit walked up to me on the street, handed me twenty dollars, said “Pay it forward,” and walked away.
So, windfalls happen. Christmases, birthdays, random guys on the street, gift cards, raffle drawings, extra paychecks, bonus paychecks, etc. But is that unexpected, unbudgeted for cash “free” money, to spend as you want? Or should it be used for something “sensible”?
When I was younger, the moment I got “extra” money, I considered it a free pass to buy whatever I wanted. I would suddenly remember the nine hundred things I wanted, and before I knew it–*POOF*–it was gone. And I often didn’t have anything really to show for it, which was kind of frustrating.
As I’ve gotten older and (theoretically) wiser, I’ve figured out a better plan. My advice now?
SAVE IT. Hold on to it. Put it in timeout, if you will, until you can consider what you want to do with it.
Where I used to spend it immediately, now, if I get unexpected extra cash, its first stop is always my savings account, where I leave it alone for 30 days.
During those 30 days, I make a list of the things that I’d like to do with the money, whether it’s treat myself to a nice dinner, or buy those new shoes I’ve been eyeing, or use it for something practical like paying down debt. I can wish and dream and ponder all I want, but I can’t spend any of that money until the 30 days are up.
And the funny thing is, by the end of that self-imposed “timeout” period, I often find that I don’t need half (or any) of the things I was dying to buy when I first got the extra money. When I first implemented this plan, I usually couldn’t wait to spend the money as soon as the 30 days were up. Anymore, though, I usually leave the money in savings to accumulate toward a bigger goal or purchase down the road. Talk about progress.
(As far as gift cards go, I usually leave them at home in a designated place with the date of receipt written on them. I can go to the store or look online, but I can’t spend that gift card until 30 days have passed and I’m sure that what I’m using it for is really what I want.)
So, if you’re like me, and you often find yourself wondering where that $40 you got from Aunt Linda for your birthday disappeared to, try putting your money in timeout for a month, and see if it helps.
Megan works in financial literacy education for the state of Colorado, and is about to start a three year educational journey to earn a Master’s degree in Accounting. She plans to become a CPA, and help small businesses better manage their money. She blogs at TheFinanceGeek.com and Becoming A CPA.
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