So you’ve come into a bit of cash, congratulations! First thing’s first, what’s a windfall? A windfall is when you received an unexpected, potentially large, sum of money. This could be an inheritance, a gift, a refund (tax, student loan), etc. Basically, it’s an amount of money that you weren’t relying on. This is an exciting moment, but it’s also a good time to take a step back before making any decisions.

Here are some ideas for what you should do if and when you get a windfall.

This is an exciting moment, but it’s also a good time to take a step back before making any decisions.

Don’t Spend It Right Away

I know it’s tempting, but don’t spend this money as soon as you get it! If you spend it without being thoughtful, you know you’ll regret it later. If you know that money burns a hole in your pocket, move the money out of your checking account. Put the money into a savings account that is separate from your checking, or give the check to someone you trust to hold onto.

Prioritize Your Goals

This is a great time to get some perspective on your financial situation. Figure out which goals you want (or must) attack first. It could be paying down debt, building up savings, or investing in something you’ve been putting off. Whatever the goals are, you should identify them individually and then prioritize them. It helps to write out your goals clearly so you know where you stand.

Get Clear on Your Debts

This is an amazing opportunity to start making progress on any debt you have. The first step here is to figure out exactly how much you owe and to whom. If you aren’t sure - perhaps you have been avoiding your debt - a good start is to pull your credit report. You can do this for free at You’ll see any debts that have been sent to collections, any tax liens, and any late payments on credit cards or loans. This probably won’t feel very good, but it’s necessary. If you see any debts listed that you don’t recognize, you should do some digging to see if they are on your report in error. Whatever you do recognize, come up with a plan to pay it off.

Beef Up Your Emergency Fund

Saving for emergencies doesn’t feel very fun, but it’s an incredibly important step to take. It will protect you if something unexpected happens, like losing your job or getting sick. If you don’t have debt, or you have money leftover after paying off your debt, you should use your windfall to beef up your emergency savings account.

Put 10% Aside for Fun

Putting all your money towards responsible goals is great, but it often doesn’t feel very fun or exciting. That’s why it’s a good idea to set ten percent of that windfall aside just for you. When you make room for indulgence, it’s easier to be responsible with most of the money. Plus, you get the instant gratification that is so compelling. Put the money towards something you’ve been really wanted to do or have, but that you haven’t been able to afford.

Have you ever received a windfall? What did you do with it? Do you wish you’d done something different? Share in the comments!