Skip to main content

When you think about budgeting, you probably think about rules and restrictions and never getting to buy anything ‘fun.’ But every so often, a magical day rolls around where—surprise! An unexpected windfall appears in your paycheck or bank account.

It’s pretty unlikely that you won the lottery, but it’s very possible you either earned a raise through hard work, netted a bonus, sold something valuable, or even received a gift from a generous family member.

Having this extra cash burning a hole in your bank account can actually be more stressful than you might expect. You now have to make decisions on where and how to spend the money in a way that makes the most fiscal sense but hopefully still allows for a little fun (you’ve earned it after all!). Consider the following ideas to make the most of your new cashflow.

Examine the cash.

No, not with a magnifying glass. Is it a recurring payment, like a salary increase? Or a bonus that’s one-and-done? If it’s recurring, break down how much extra income you’ll see on a weekly and monthly basis and how that can affect your regular spending. If it’s a single payout, consider whether you want to use all the money at once (to pay off a debt or make a large purchase), put the cash in savings to let it grow over time, break it up into pieces, or set it aside but draw a little out each month so it acts more like a raise.

Consult your budget.

Don’t have a budget? Build one. Budget out of date? Update it. To figure out the best way to utilize your extra cash, examine how you’re already allocating your money and look for gaps. Debt? Put some (or all) of the new money toward paying it off. Empty emergency fund? Start building it up. Dream vacation? Consider a Name Your Savings account. Or, if it’s ongoing income, analyze your budget to determine which categories (from groceries to your “Fun Fund”) need a little more wiggle room and allocate accordingly.

Do what feels best.

While the goal is always to be responsible with your money and make the smartest decisions, sometimes having a little fun is valuable, too. If you’re carrying a lot of debt and have unpaid bills, then use the money to get caught up, because relieving the stress of financial burdens is critical. But if you’re in a comfortable spot financially, using the cash to help someone else, further a good cause, or have the experience of a lifetime, maybe the right way to go.

Budgeting doesn’t always revolve around restrictions and rules, but at times, may surprisingly come up for review due to an increase in income. Make sure you are fiscally responsible and make the most of this new cashflow.

Look for more tips to build your budget? Check out our monthly blog posts for more resources and tips.