Thursday, April 16, 2015

Spending Your Windfall

© <a href="">Sonulkaster</a> | <a href=""></a> - <a href="">Slot Machine On Shiny Background Photo</a>
Every once in a while we hit the jack pot. {I am not referring to your Las Vegas winnings.}  The jackpot is your employment bonus and tax refund which drop in your lap.  How will you spend yours?  No doubt your windfall can be spent ten times over ~~ the long awaited vacation, the new big screen television, or the new set of golf clubs.  Since I am not one to spoil a party, because I love a good party, I suggest you tread wisely.  When you think seriously, this windfall can also give you peace of mind.  Peace of mind comes in the form of paying down student loans, topping up RRSP contributions, saving for children’s educations or paying off credit cards. What should you do?  With so many directions to travel on the road to financial success, choosing the right one requires discretion.  This starts with reviewing your goals, dreams, and aspirations.

Here’s a thought.  In previous blogs, I referred to having three worlds: the past, the present, and the future.  These three worlds are connected to the debt you incurred from the past, the lifestyle you want to enjoy in the present moment, and the savings you require to retire comfortably in the future.  To adequately meet the demands in each world, you need to divide your jackpot equally. You don’t have to choose one over the other (unless you want to do so.)

Here is an example.

With a tax refund of $1,500, a top-up payment of $500 is applied to your credit card.  The new television purchase is $500 and the remaining $500 is deposited to your Registered Retirement Savings Plan (RRSP).  Using this logical approach allows all your goals to be met with the extra cash.

To ensure you are achieving your goals and living within your allotted income, you may wish to refresh your memory by reading “Why Do I Need A Budget?"  Because life happens, your budget should be revised annually to accommodate any changes. “Get Smarter About Money” provides useful tools and information when it’s time to review your budget.  Click here to access this website.

Now it’s your turn to think about what you will do with your windfall. 

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