What To Do With A Windfall


What to do with a windfall? A windfall meaning a big, juicy inflow of money into your life. 

I looked up the origin of “windfall” and this popped up on google…

Lucky you! You just won the lottery and your windfall will make life very comfortable for you and your family. A windfall is a crazy bit of unexpected good fortune.

First used in the fifteenth century, the word windfall originally referred to fruit that the wind blew from the trees. Like a prize was there for whomever found it — no need for the ladder and effort of picking it from the tall trees. The word eventually came to mean any unexpected and easily-gained good fortune, typically one involving money, such as the windfall profit from a lucky stock purchase.

This definition of windfall is so funny and so sad. 

Firstly, we (as Wealth chef’s) know that for 86% of lottery winners, the windfall is anything but lucky as they end up in a worse financial position within two years of the windfall because they never learned how to manage, keep and grow the money.

Secondly, we (as Wealth chef’s) know that we don’t have “lucky” stock purchases, we have proven wealth creation strategies that we put on autopilot!

What to do with a windfall so it actually makes a sustainable difference in your life, is what this video is all about. Watch it now.

Knowing how to handle a windfall might seem like a quality problem but for most people, it’s not a quality problem, it’s a very serious problem.

Most people have no idea how to handle a big inflow of money, or any “irregular” inflow. 

It could be smaller lumps like a year-end bonus at work, a tax refund, a salary raise, a gift.  Or bigger inflows like a substantial inheritance, a divorce settlement, a life insurance payout or compensation claim payout. 

Without having a strategy or plan to deal with unplanned inflows, bad things happen.

BAD THING – The money just flows straight out, because if you’ve got a dysfunctional money flow, all the additional inflow will do is magnify that faulty money flow.

If you don’t know about money flows and whether you’ve got a dysfunctional one or not, go to this post to find out >>> Money Flow Patterns.

The dysfunctional money flow gets magnified by the increase of money, and when that windfall dries up, you end up with a wider or bigger dysfunctional money flow putting you in a worse financial position.

This is the first reason why most people who get a big windfall, a divorce settlement, an inheritance, a lottery win, maybe some kind of payout from an insurance, end up in a worse financial position within two years from when they got the windfall. 

It’s also the reason that over 94% of all big earners in the sport and entertainment, musicians, movie stars, big sports stars that get a lot of money for a short period of time end up in really bad financial positions, because they’ve never been taught what to do with it. 


The most important thing to do when you have any kind of bigger chunk of money flow into your life is neutralise it.

We have one mindset or behaviour around money that we actively work for, “my hard-earned money”,  but windfalls, easy come, easy go! 

Often people treat it as having a lower value and so manage it poorly and hence it becomes super easy to let it flow out. 

People will say things like, “I didn’t work for it, so I can splurge! Let’s go on that holiday, use it for “treats”,  buy more stuff, get a new car… They’ll treat windfall money differently to earned money.

The first step when handling a windfall is to neutralise this energy by putting ALL money inflows into a reservoir account. This is just the name I use for it. It’s a bank account you set up to catch all the inflow and let it settle there to neutralise. This is not your day-to-day transaction account. The money can then spend a little bit of time in this big money dam to blend with money from other sources, including your actively-earned income, so it ends up all just money. No longer “free money”, “earned money”, “investment money”, “windfall money”, “inheritance money” – just money.  

This account is also really important to have as you start getting more asset-generated income and if you have variable inflows as it helps smooth out the flow.

You then distribute the money from this account in a structured way, such as the Wealth Pie money management system.


Windfalls can move you closer to your freedom number in big leaps if you consciously direct it to your balance sheet. 

This means directing the windfall money to increasing your assets and reducing your consumer debt. Both actions increase your net worth.

Use the windfall money to create and invest in assets, those assets end up working for you over and over and over again. If you just spend the money on stuff, it is gone forever, whereas if you convert it into assets, it’ll keep earning for you over and over and you get to spend it over and over down the road. 

Use some of the windfall to blitz consumer debt. You only want to blitz consumer / contraction debt. If you aren’t clear on what that is check out this post on the different types of debt and which you want out of your life fast. Don’t use a windfall to reduce your neutral debts, like your mortgage on your house, and do not pay down expansion debt with a windfall. 

Use a windfall to blitz consumer debt, credit cards, overdrafts, store cards, car loans, student loans (except in the UK where student loans from the Government are paid back off earned income), IOUs, short payday loans, all of that hideous stuff. 

When you blitz consumer debt with some of a windfall you are not only clearing the “bad” liability, you are expanding the benefit as you will eliminate the future interest you would have had to pay on that debt.

If the windfall is an inheritance, a death benefit, a disability payout or a divorce settlement, you want a minimum of 90% of the windfall going to assets, because this money is meant to look after your future financial wellbeing. 

If it’s something like a tax rebate, a gift, a bonus, divide it up using the Wealth Pie money management system percentages.

Pay your freedom first. Check to see if you have utilised your tax-protected investment allowances and if not use those up.  Your ISA allowance, your Roth allowance, your tax-free savings account allowances. 

Have you fully utilised your tax-deferred / retirement funding allowances? Are you in a country where you can utilise previous years’ allowances? If you can, use up these allowances with the windfall because they enables your investments to grow free of tax and so you gain even more. 

Build up your cash safety net and your emergency fund. If you don’t have these in place, go to this article to understand what your Emergency Fund is all about.

Pay down and clear consumer debt

Have some fun. Celebrate and direct some of the windfall to things that bring you joy, but not all of it. 

We must enjoy our lives NOW and direct some of the money we have towards lighting ourselves up. If you constantly deprive yourself in the name of financial wellbeing, you will find a way to sabotage your progress and it  will blow up in a big, messy money drama. We need to be satiating our desires, having joy, and celebrating life, but we must ensure we’re spending it on things we really enjoy. So indulge, have fun and really get value from the money you consciously direct to your joy, rather than unconsciously letting it leak away. 

Expand you. Allocate some of your windfall to knowledge and growth. What is an area you want to get an education and training in? Is there a course you need to do? Is there a teacher you want to work with? Is it something that can increase your active earning potential? Something that will help you create assets?  Do you want to learn how to invest in the stock market ? Do you need to get a property investment mentor or learn how to do rent to rent to build a passive income flow? Can you increase your skills or start on online business? Allocate some of your windfall for your growth. 

In the comments below I’d love to know:

  • How have you managed windfall inflows in the past? 
  • Did you have a strategy? 
  • How do you believe having a windfall management strategy will help you going forward? 

Please share in as much detail as you can and share your “aha’s” because that will also help others that come here also looking to grow their financial freedom and financial savviness and improve their relationship with money, so they too can get to live their greatest life. 

Remember, your freedom is created one step at a time, so keep taking those steps. 

Until next time, keep choosing you and your rich, juicy life.


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  • Rachael Wairimu says:

    Wow this is an eye opener to me now that am expecting my savings from my former employer. Thank you Ann. Am taking every step at a time towards my financial freedom.

  • Lindsay Maureen van Rooyen says:

    Thank you Ann. You are teaching even us baby boomers to be be money wise. I have wasted a lot of money in the past living the good life and now really need to knuckle down and follow your strategies.
    So valuable retirement age comes so quickly.

  • Rachael Ballard says:

    Hi I was just wondering why you wouldn’t use part of a windfall to put in your mortgage? I am planning to pay off my credit card and car (fortunately I don’t owe very much) , invest in my TFSA and the rest put in my mortgage. This has been a very helpful podcast. Thank you.

  • Karen says:

    I once had a divorce settlement and was so relieved to have money I took my children shopping …. didn’t take long to disappear and was again overdrawn. You are so right about the different attitudes to money. I am due another lump and it will be left a while to settle in before I distribute it wisely. Your book The Wealth Chef is awesome and not only am i out of a persistant £500 overdraft….. I have had an index tracker for almost two years. I divide up my money now sensibly, treat my children and myself and save…. Thank you Ann for your amazing advice and motivation

  • Joanne says:

    Brilliant advice, thank you!

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