As I have written in this blog several times, my family prioritizes investing in education and experiences. We love to travel and we also love to work on improving ourselves. That’s how we spend our money. Outside of this, I am programmed to be selective about spending. In fact, I get downright anxious whenever I spend money needlessly or recklessly.
So, what happens when a cheapster like me comes across a financial windfall? In the past two years, I have come into unexpected money a few times. What I have learned is that I don’t know how to act. I have been cheap for so long that I don’t really know how to spend extra money. My initial reaction was to save it. Throw it into a high-interest savings or money market account until I was ready to deal with it. I needed to work through the emotions tied to it. The excitement, the nerves, the nausea.
Some people say to splurge, do something fun. It’s like being on a diet and being told I could eat anything I want and not having to worry about weight gain or bad health. But I don’t know how to blow through money. Many of us have heard stories of lottery winners blowing through their winnings or adult children running through their inheritances. The fear is ending up back where I started years ago: broke.
Here’s how I have cautiously handled the past few times I receive unexpected money.
A Buyout From Employer
When my job ended, I left with a huge payout. I had already been stockpiling money because I had been planning to leave that position and take a year off. Now, with this payout, I had an extra cushion. I paid off debt, purchased some stock and stockpiled the rest into a high-interest savings account until I could figure out what to do next. I also attempted to buy an investment property, but the housing marketing has been brutally competitive the past two years during COVID. As an investor, paying inflated prices is a nonstarter. I ended up taking another position before the full year was up and I still have the remainder of this money stashed away.
Unexpected Pay Increases
This one’s a lot easier. I received a promotion and two raises within the first year of my new position. However, I ignored the extra money. In fact, for years I have been in the practice of living below my means. Let’s say I bring in $1,000 a week, my budget reflects that I was paid $700, ignoring the extra money and pushing it off into savings or investing.
Someone Paying Back a Loan
If you have read My 6 Rules for Lending Money, you know I always allow borrowers the flexibility of choosing when they can pay back money I lend them. So, whenever money is paid back, it’s always unexpected—a windfall. The most recent time this happened, I returned it to an account for household expenses. Other times, I have returned the money to my savings account for safekeeping. Again, this is not a reliable source of money because of the flexibility I allow borrowers.
Money From Family
Again, because I am not conditioned to splurge, my immediate response was to pause and stash this away until I decide what to do. That’s where I stand today, paused.
Whether I am broke or flush, excitement, nerves and nausea reign.
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