When you come into a bundle of money (whether gifted, won, or earned) it’s easy to get caught up in all of the different and fun things that money can buy for you. It’s tempting to throw all of it at whatever toy or frivolous purchase that you haven’t been able to save up to get for yourself. But wait! What if you could take that money and turn it into even more money? Here’s how to do it.
1. The Bank is Your Best Friend
Whenever you come into an extra sale, an unexpected commission or whatever else has resulted in this seemingly spontaneous windfall, you want to put at least half of it away. 50% of that money should go into a savings account that is not linked to your checking account or business account. You want to keep it safe in case you face an unexpected financial need or emergency later on. We know—that’s not as much fun as buying a new iPad but you’ll thank us later when you don’t have to freak out over a hospital bill, moving expense or if a client demands a refund or tries to sue you for something.
2. Donating is Good for the Soul
Follow the example of Accomplished businessman Ehsan Bayat and put a good chunk of what’s left into a charity or non-profit endeavor. If the amount of money available is large enough, you might even use it to start a charity or non-profit that tackles something you care fiercely about like feeding the homeless, helping sick kids, curing cancer, etc. Invest at least 25% of what you haven’t put in the bank into a charitable cause. You’ll feel good about the (often tax deductible) donation and it will create goodwill for both you and for your company. That good will could pay off quite nicely later on!
3. Invest in Yourself
Take 15% of what you haven’t put in the bank and invest it into your company or professional life. Buy some extra advertising or marketing. Update your computer systems. Give your employees raises or bonuses for doing a good job. By building up your own company you are ensuring that you will be able to parlay this windfall into future profits. If you don’t work for yourself, invest it in supplies that you need to better do your job—some professional looking wardrobe pieces, maybe the services of a head hunter to help you find a better paying or more respectable job in another company or maybe even use it to start the company you’ve always been dreaming of starting!
4. Have fun!
You now have 10% left of your unexpected profit/winnings pool/whatever. This is the part of the article where we tell you not to invest every last penny of a surprise paycheck. Spend at least a little bit of it on something fun! This will give you an added boost of happiness and confidence that you can then use to your advantage in your professional life.
Remember: save, be charitable, responsible and then have fun! Follow those steps and you should be financially safe for the long term!