Just the other day, I landed a big sale. Big enough to pay for two months worth of our family expenses. Substantial enough for a single guy to live for a year.
What's the first thing that do you do when you receive a large chunk of money?
I'll be honest. Receiving that money automatically gave me the desire to ... SPEND.
Photo Credit
Ever since my kids were small, we've taken videos of our trips.
It has been a tradition for us to edit the best parts and turn it into home movies.
So a small part of the money went into that purchase.
Why are we not 'guilty' of this purchase? It's because even before we received the money, we already made a plan on how we will handle it.
When we were younger, we experienced how fast it was to deplete hundreds of thousands. If you don't know what you're doing that money is quick to squander.
So what's the best thing to do with Instant Money? (in no particular order)
(1) Blow Money.
Set aside more or less 5% of your money to blow away. This is not conventional wisdom. In fact, it's not really for everybody.
But if this is 'extra money' or money that you really don't need to pay for your bills, 5% is better than spending the whole amount for something.
If you've worked hard for this money and you still have more than enough to keep, give yourself a break. You can reward yourself. Buy that one gadget that you were dreaming of. Shop for new clothes. Eat out in the fancy restaurant you've been craving for.
(1) Blow Money.
Set aside more or less 5% of your money to blow away. This is not conventional wisdom. In fact, it's not really for everybody.
But if this is 'extra money' or money that you really don't need to pay for your bills, 5% is better than spending the whole amount for something.
If you've worked hard for this money and you still have more than enough to keep, give yourself a break. You can reward yourself. Buy that one gadget that you were dreaming of. Shop for new clothes. Eat out in the fancy restaurant you've been craving for.
Celebrate. The last thing that you want to feel during this favorable event is deprivation.
Spend as long as it's within the blow money.
(2) Save.
This shouldn't be the last thing on the list. In fact, it should be the first one. You have two options on how to approach this...
Equation A • Instant Money - Savings = Expenses
Equation B • Instant Money - Expenses = Savings
Equation A is more effective than Equation B. Once you start spending, the possibility to save becomes slimmer. So it's better to put it aside first.
(3) Invest.
Set aside money that will allow you to make more money. Allow it to work for you.
(2) Save.
This shouldn't be the last thing on the list. In fact, it should be the first one. You have two options on how to approach this...
Equation A • Instant Money - Savings = Expenses
Equation B • Instant Money - Expenses = Savings
Equation A is more effective than Equation B. Once you start spending, the possibility to save becomes slimmer. So it's better to put it aside first.
(3) Invest.
Set aside money that will allow you to make more money. Allow it to work for you.
In this case, I used a large chunk of the money to pay for the amortization of the condominium we purchased as an investment. This will allow the property to have an early 'turn-over'. Enabling us to lease out the apartment and collect rent immediately. The plan is to let the property pay for itself later on.
Use the money for your investments or to fund your new 'money-making' venture.
(4) Pay Debt.
This is self-explanatory. I'm sure you have an idea on how to go about this.
(5) Give.
Whatever we sow, we reap. Giving is a way to acknowledge that whatever we have today is a favor received from God. Blessings are from him.
