How would you spend a windfall?

A large, unexpected sum of money is a dream many of us have. The amount you gain should determine how you spend it. 

Romeo Ranoco/Rueters/File
A worker counts US dollar bills inside a money changer in Manila in April. According to Hamm, getting the most out of an unexpected windfall means having different strategies for spending various amounts.

It’s a natural human dream that many of us have. Something happens and suddenly a substantial chunk of money falls on our lap – enough to change the dynamics of our life in some fashion.

For a lot of people, a windfall would be used to pay off debts. That mortgage would disappear, as would those credit card debts.

For others (even many of the people with debts), a big splurge would be in order. It’s time for a shiny new truck or a big trip or a new speedboat.

That eliminates most of the people who would receive a windfall.

What about the rest of us, though? Neither of those options really apply to me. I don’t have any debts to pay off (thank goodness!), nor do I have a desire for any sort of big splurge. Even if I could, I wouldn’t go out and buy a new vehicle today, nor would I start packing my bags for a trip to New Zealand or something. I might eventually travel, but I’d still plan for it, regardless of how much money I have.

This begs the question, then: what would I do with a windfall?

My gameplan would be different depending on the amount, so let’s walk through those amounts.

If the windfall were less than $250,000 after taxes, I would fund my savings for various long-term goals. As I’ve mentioned before, I’m already saving for things like international vacations for my children when they get older, their college educations, and other initiatives. I would use a relatively small windfall to make sure all of those goals were well-funded.

If the windfall were less than $750,000 after taxes, I would also build our dream home. This is another long term goal we’re saving for, but this kind of money would enable us to start building now rather than later.

Our ideal home is in a rural environment with some wooded areas on our land as a nature preserve of sorts. It would be built from the ground up to be incredibly energy efficient, ideally so that it could be fully self-sustaining in terms of energy use with excess going back out onto the energy grid. We’re not interested in an extremely large home – in fact, our floor plan wouldn’t be too different than the one we currently have except with only two floors instead of three (as our parents are getting old and our current floor plan has no main-floor sleeping areas).

Once we have the cash on hand to build this, we’re going to move forward with it.

If the windfall were more than $1.5 million after taxes, Sarah and I would both walk away from our day-to-day work. I’d love to be able to solely focus on writing fiction as well as on volunteer opportunities in our community. Sarah would probably be hard-pressed to walk away from her professional passions, so she’d likely seek another outlet for her teaching skills.

Any amounts between $750,000 and $1.5 million would go solely toward funding an early retirement.

This seems boring, doesn’t it? There are no big splurges (aside from the house, but that’s just fulfillment of a goal that we’re already working on). Instead, it’s all about either saving for the future or investing in real estate. What’s the fun in that?

For us, the fun is being financially secure and enjoying the lack of stress plus the knowledge that our long-term goals will happen because the money is already set aside for them. That is worth its weight in gold to us. There is no splurge, to either myself or Sarah, that’s more fulfilling than having that.

It might be boring, but it’s also very low-stress and incredibly fulfilling over the long term. I wouldn’t have it any other way.

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