Unexpected Money: Treat It Right
Posted by Richard on February 3, 2021
At some point, most everyone gets a dab of money that is unexpected — or at least from a source different from payday money.
You may win, inherit, or get some as a gift. And then there it is, looking lovely and fresh in the checking account.
Go wild or what?
People tend to treat money differently depending on how they got it. Money from a job usually goes to living expenses first and foremost.
But a gift? Maybe then you want to treat yourself to a ‘want’ instead of a need.
Inheritance is more sobering since the money comes from a person you respect and you might not want to waste it.
How about $50 from a scratch-off ticket? For many, winning money feels like spending someone else’s money. And they do.
Tax return money? It usually has a place to go.
It’s a fun exercise to consider your impulses when it comes to unexpected money. The way you view it is called ‘mental accounting,’ according to Investopedia.
Of course, money experts say all money should be treated the same. Author Gary Belsky once wrote that all found money should go into a savings account for just one month. When the month is up, it will feel more like savings than a windfall. You will be less likely to spend it on a shopping spree.
The key to treating all money the same way is to focus on big financial goals, like retirement or college accounts. So when you are blessed with a little extra, you know just where you want to put it.