Got windfall? What to do?
There was this article that I'd been reading. My friend Frances shared it on her Facebook feed and curiously, it got me clicking away. This particular part of the article had me thinking "I was just like this!" :s
When You're Poor ...
Every poor person I knew got a big check one time a year in the form of their tax return. They made just enough money to file taxes, and made little enough to claim "earned income credit," which is a tax credit that can dramatically boost your return. For my ex-wife and I, it meant getting around $5,000 at the end of January. And just like many poor people, we'd be broke within days of cashing that check, our living room sporting a new TV. Or we'd replace our old computers and all of our furniture. There's a reason many poor people blow through that money instead of saving it for future bills.
When you live in poverty, you're used to your bank account revolving very tightly around a balance of zero. Your work money comes in and goes right back out to bills, leaving you breaking even each month (if you're lucky). That's the life you've gotten used to. It's normal for you.
What is the source of this train of thought, you ask?
It’s yearly bonus time again and the shopaholic in me is tingling in excitement as I anticipate all the things I could do with my money. Visit a new country, buy that designer bag I’d been dreaming of for many months now or how about a nice new bed and matching 500 thread count Egyptian sheets?
I’m not too sure when I stopped thinking like this – maybe it was the wisdom of growing old, or the comfort of multiple sources of income that I suddenly was just not into purchasing unnecessary stuff anymore. After the consideration of space limitations comes the justification:
Why do I need this again?
So now that I’ve eliminated the option of buying yet another senseless {but most likely to be gorgeous} purchase, I was left with a conundrum to solve: What to do with my windfall?
Here are some of my very adult options on what to do with my windfall. Some of them might just be for you, too!
a. Pay my dues in advance. In my case, since I’m paying for my home, I am making an advance deposit on the account. One responsibility off my back, yeah? That and making a defense against interest rates. If you have credit card debt, this is the best way to pay off whatever you owe because as time ticks away, so does your compounded interest.
b. Pay yourself. Something I’ve always considered a necessary expense, paying myself is a necessary step whenever I have a huge sum of money coming in. Whereas I used to think that rewards for myself came in the form of red-soled heels before, now, that means more zeroes in my bank account balance.
c. Put the money somewhere it will grow. So you don’t have a use for that money --- why not go shopping? However, if there was anything I’ve learned in the last five years is that it’s not how much you have --- it’s what you do with your money. There are a TON of options {from SDAs, the stock market, to TDs to UITFs and Mutual Funds}. Make your money grow. You won’t regret it.
d. Charity. So you have so much money, you need space. Why not give it to the needy? After all, they say that the best investment is where the money builds people. Choose a cause, an advocacy and be rewarded with things that money cannot buy.
e. Set up your retirement fund. Something most of the older Filipinos overlooked, the retirement fund was my very first foray into investing as soon as I started working. It is a very comforting thought to know that even if I may end up alone when I'm old, at least I won't be alone and poor. You know another reason? Companies will loan you education fund for your kids, a home loan and whatever loan. No one lends anyone retirement money.
f. Get something you've always wanted. It may really have been something you've planned for in a long time so if you have no debts, and no outstanding financial responsibilities, then yes, go ahead! :)
So, have you figured out what to do with your windfall?
xx
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