Windfalling, as Tom Petty Never Sang…

Chances are you didn’t win a billion dollars in the lottery this month. (But if you did, I’d like to share my Venmo handle with you.) There is an equally good chance, however, that over the course of the year, you did experience some kind of windfall.

What is a windfall? Investopedia says it best: “Windfall profits are large, unexpected gains resulting from lucky circumstances.” Clearly, a lottery or other gambling win fits that definition, but even in more normal circumstances, windfalls abound in our lives:

  • A tax refund

  • An unexpectedly long pause in federal student loan payments

  • Unanticipated overtime work

  • Mild weather that allows you to open your windows and not incur a large air conditioning bill (or leave them closed and not turn on the heat)

And this brings us around to financial wellness, because of course it does. One thing we know as money coaches is that your feeling of financial well-being is tied to your sense of control over your money. Countless conversations with coaches start with, “I don’t know where it all goes.”

If you accept that you will likely have windfalls (or perhaps mini-windfalls) throughout the year, shouldn’t you have a plan in place for them? And if you had a plan in place, would that not increase your sense of being in control of your money?

We are constantly urged to have contingency plans for emergencies such as stormy weather. Aside from the obvious safety aspect, it provides a sense of security to know that should the worst happen, we have a way to deal with it. The same applies to windfalls. If you have actually verbalized your financial priority before the unexpected bonus hits your account, you are in a better position to see that the money finds its way to this goal.

Humans being humans, we do not treat every dollar the same way. As I wrote earlier this year, “Many people will treat an unexpected bonus as money ripe for a major treat, despite having a more rational need for it. We see a dollar earned as being somehow different than a dollar won and mentally account for it differently.”

Recognizing that, let’s make a deal. Right now, what are your top two financial goals? Here’s the plan: When a windfall appears, 90% funds one or more of your stated financial goals (emergency fund, debt repayment, specific savings goal, etc.); go wild with the remaining 10%. I want you to be a financially well, joyful human, not a robot!

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