Financial Tips

Financial Tips How to spend unexpected money the right way

Because you get money unexpectedly from someone or somewhere, doesn't mean you shouldn't have any plan for such money and squandering it all.

How do you spend the money you didn't expect to get? Is there a right way to spend unexpected money?

Sometimes we receive money that we never expected from family members, friends often monetary gifts.

Because you get money unexpectedly from someone or somewhere, doesn't mean you shouldn't have any plan for such money and squandering it all.

1. Have a financial plan

The first thing you should do when you get or receive is to create a financial plan for it. What would you do with all of it?

If you don't have any financial plan or goals then create a plan. The money should go into your short-term and long-term plans which is are based on your financial goals. If you already have a financial plan the money is meant to improve your financial plan to achieve your financial goals quicker.

2. Clear your debt

With unexpected money in your possession and you haven't paid off your debt then it is the best time to settle and clear your debt.

ALSO READ: 6 ways to grow your personal savings during the month

Being out of debt is way better than having to squander such money, which would not only leaving you broke but still leave you in serious debt. So you should think of clearing all your debt.

3. Invest your money

Another thing you can do with such unexpected money is to invest it in a productive venture. Talk to a financial adviser on what you can invest your money on.

Before you invest your money, make sure you also do your personal research on what you want to invest in, finding out the level of risk involved. Instead of spending it all, you can make more out of such money.

4. Save and also create an emergency fund

Out of the money, you should save some and also create or put some into your emergency fund, which should only be accessed when you have an emergency situation.

5. Enjoy part of the money

After creating a financial plan, having a savings and emergency fund, investing and also settling your debt, you should take some out to enjoy yourself.

ALSO READ: Why you need a budget

 It shouldn't be more than ten percent of the money. Though it is meant for you to enjoy it, you need to spend it wisely and not squander it.