6 second take: If you’ve recently found yourself with an influx of cash, but are unsure how to spend it, consider these twelve best uses.

We all periodically receive windfalls of some form. One of the most common is a tax refund.

The problem for many people is that the windfall income comes into the household and gets absorbed into the budget. A few months later, it’s nearly impossible to tell where it went.

Another common scenario is that the windfall is used as a down payment on a new car or similarly used for a purchase you would likely have made anyway.

The way to avoid the windfall trap is through intent. Most windfalls arrive with some heads-up. You know they’re coming a few days or weeks beforehand. You have time to consider your options and make a choice or set of choices to maximize your long-term benefit — to decide on the best thing to do with your extra money.

My list breaks potential choices into three categories: those that can increase your productivity — or at least save you some time to do other things; items dedicated to the benefit of yourself; and lastly choices that are beneficial to your financial future.

The intent is to help you be intentional with your expected windfall. A number of these items require less than $1,000. The expectation is that for many people, the optimal solution would be to do several smaller things at the same time, maximizing their total benefit from their windfall.

Investing in Productivity

Technology items can be a great time-saver, whether a new printer or a new device. Technology can also quickly absorb funds and be more of a time-waster than a time-saver, you must choose wisely.

Robot vacuums are a great time-saver — if you vacuum! They won’t save you any time if that’s not something you do. Maybe the reason some people don’t vacuum is that they don’t have the time — presto, there it is. You still need to put a minor amount of time in to make sure there’s nothing on the floor that would cause a problem for the robot, but it’s nothing like having to do it yourself. 

Kitchen appliances, such as new options like Instant Pots, are great for saving time in the kitchen. They don’t make cooking completely timeless, but they enable you to make awesome food in far less time than it would take without the device; also cleanup is easier because everything’s cooked in one pot. 

A good grill is another great time-saver, although we don’t often think of it as one. The grill is a time-saver for cleanup. You can cook an entire meal out on your grill and your total cleanup is tossing the dishes in the dishwasher — no pots or pans to deal with. My fastest cleanup meals are all things I make on the grill. 

A washing machine and dryer are also big time-saving devices — if you have washer/dryer hookups in your home.

Tools can save a ton of time, especially for repetitive jobs. If you do a lot of work on cars for example, but don’t have a good floor jack or good impact wrench, you’re spending a lot of time doing things that could be done quicker. Or it could be a nailer, a miter saw, or any of a variety of other tools. 

The key to being a time-saver is that it would allow you to do something you’re presently doing, but do it much quicker. This is an area where it’s also easy to spend money but not save time if you don’t choose carefully.

Investing in Yourself

Paint or redecorate a room. Investing in yourself doesn’t have to mean making you somehow different to others. Painting or redecorating a room can give you a nice mental boost or even just relief that you have a place more to your liking. If you can DIY, it doesn’t have to be pricey. Hiring someone to do the job can be a viable option but will put a far bigger dent in your budget.

Education is always a great option. And the options are far wider than they have ever been. 

There is nearly no limit to the courses and programs available where you can learn just about anything you might ever want to. 

Perhaps it’s a new language, perhaps a new skill. Perhaps you want to start a bigger learning project and begin learning to fly or to sail. Your windfall might not cover it all, but could give you a great start.

A new mattress is something many people put off and put off. People sleep on lumpy uncomfortable mattresses that should have been thrown to the curb long ago. Or at least they try to sleep on them. If the mattress should have gone long ago, this could be the best use of a windfall and be something that lasts for a long time. 

Clothing (or shoes!) can be a good option for a windfall. If you already have a closet full of the latest fashion, it’s probably not the best choice. It may be the most likely, but not the best. For the rest of us, a couple of new pieces can boost our looks and spirits and still leave a lot of windfall to use elsewhere.

Investing in Your Financial Future

An emergency fund is essential to help you weather life’s challenges. Too few people have an adequate emergency fund, and that is never more apparent than during or right after an emergency. 

An emergency fund opens up your options and helps prevent you from going backward during difficult times. 

If you don’t have an emergency fund, starting one is probably the most financially prudent use of a windfall. It may not be glamorous or sexy but your future self will thank your present self many times over. 

Pay down debt, or pay off debt. Debt is financial cancer, sucking the very life out of your financial well-being and financial future. It robs the present and the future to provide for the past. Sometimes that was something worthwhile, but most debt is a drain with little or nothing left providing ongoing benefit. Paying down debt is also something your future self will laud you for.

Retirement plans are a great investment into your future and can be made in nearly any size. You probably can’t just add funds to your work plan but can certainly open up an IRA or Roth IRA. Most Americans are underfunded for their retirements. You can lessen any shortfall you have. Anything helps. Again, your future self will think you were a genius.

College funding is a great option for parents. Or grandparents. Or great-grandparents. College funding is a major issue in society, and the problem isn’t likely to go away anytime soon. College is often important and often not easily affordable. Your future self and your children or children’s children can benefit down the road from decisions you make today. You can have a positive impact on your future by impacting someone else’s future.

Additional Considerations in Deciding What to Do With Extra Money

Some options will use all of a $1,000 windfall, or potentially more. Others allow you to accomplish a couple items and stay within budget. 

Charity may also be something you want to consider. There are people less fortunate that could benefit from your generosity. You might consider doing good for others for a portion of your windfall planning. 

The key to dealing with a windfall is to act intentionally, which is the key to all financial decisions. Most of us can’t do everything. And the first choice that pops into our heads may not be the choice that will benefit us the most in the long run. But by considering your options for what to do with your extra money, you can do one or more things with any windfall you get and never need to have regrets.