Unexpected windfalls can come in many forms, from gambling winnings to a larger-than-average work bonus to an inheritance.
Whichever way you acquire a substantial amount of money, it’s important to know what to do with the windfall. Here are nine ways to make your newfound wealth work for you, now and into the future.
1. Check Your Emotions
You might think you’ll feel nothing but thrilled when a lot of money falls into your lap, but negative emotions can also creep in.
Jennifer Reid, a money coach based in Boston, says it’s not uncommon for people who have struggled to make ends meet to say the influx of cash brings more stress than they anticipated.
“They worry about doing the wrong things,” she says. “They’re panicking.”
If you’re not sleeping well or are feeling anxious, undeserving, guilty, or simply out of your element, you might be experiencing Sudden Wealth Syndrome, or SWS , a psychological state in which the pressures from an unforeseen windfall can lead to various emotional and behavioral issues.
SWS can lead to overspending on luxuries that have little to no resale value, giving excessively to friends and family members and investing in overly risky ventures.
Assess your psychological well-being. If you’re overwhelmed, delay major financial decisions and seek professional mental health guidance first.
2. Delay Major Purchases
A June 2026 Empower survey found that 31% of Americans who received or expected a windfall would go shopping for travel, self-care and other discretionary purchases, while 12% would make major purchases, such as buying a car.
However, it’s best to wait until you have taken a thoughtful and holistic approach to your money. Consider all the things that you really want to buy. It could be a vintage Porsche or a vacation to the French Riviera. List these dream items and experiences, then tuck them away. Don’t make any of the purchases until you’ve settled all of your other financial affairs.
“Take a minimum of six months to a year to get settled in,” Reid says. “Let your emotions cool off too. Don’t act irrationally, and take the time to do your research.”
Review your wish list frequently, then adjust it with additions and subtractions. This will help you determine what’s most valuable to you. Some items may still be worth the price, while others may not.
3. Confide Carefully
While it can be tempting to shout from the rooftops about your newfound riches, it’s best to keep the news private, at least initially. This is not your opportunity to gloat, share details about your fortune on social media or tell friends and relatives.
A 2026 Vegas Insider survey of U.S. adults found that 42% would keep lottery winnings completely private and nearly half would limit sharing to a small circle. Those who share the news of their winnings widely could be opening themselves up to problems, from strangers asking for handouts to fraudulent advisors wanting to manage their money.
“You could get a random niece coming out of the woodwork asking for money,” Reid says. “If it’s not someone you would give to before you came into the money, don’t do it now.”
Confide only in trusted individuals. These typically include a spouse or partner, very close friends or professional advisors.
4. Turn to the Experts
Just 20% of Americans would seek the advice of a financial professional after receiving a windfall, according to the Empower survey. That could turn into an expensive problem if you don’t have a strong background in money management and investing.
This is a great opportunity to do some research so you can make informed decisions, but becoming comfortable with these topics can take months, if not longer. For now, turn to the experts.
“Seeking the help of an experienced financial advisor is wise,” William Bevins, a certified financial planner in Franklin, Tennessee, says. “Taxes, rules and the world of finance are complex. A little advice can go a long way toward helping avoid costly mistakes.”
Look for a financial advisor who can help you develop a plan covering tax planning, investment strategies, insurance products and estate planning.
5. Delete High Interest Debt
“Regardless of the windfall, financial freedom isn’t achieved until outstanding debt is eliminated,” Bevins says. “Consumer, credit card and student loan debt should be addressed first.”
Although paying off balances may not be the most exciting way to spend a windfall, it’s often the most prudent. Once those debts are gone, so are the interest charges and monthly payments. This will alleviate any pressure you may have been experiencing, and you can finally move forward.
But not all liabilities are alike. Jim Hendricks, an Algonquin, Illinois-based CFP, warns against paying off a mortgage early because the rate of return on your investments is usually higher than the interest rate on a home loan.
“And while it can be a mental relief to pay off a car, generally people who pay off their cars early become more eager to buy another new car sooner,” he says. Until you really know what you want to do with your money, hold off.
6. Boost Emergency Savings
Having a savings account that you can dip into in times of need is smart. Without it, you may turn to high-interest credit cards or loans to handle an unexpected expense.
If you don’t currently have cash in savings, use at least part of your windfall to start an emergency fund. How much you need depends on your expenses and comfort level.
Tally your basic household costs, such as housing, transportation, food, utilities and medical expenses, then multiply that figure by the number of months that will make you feel most at ease.
A good rule of thumb is to have three to six months’ worth of essential expenses set aside. The more people who depend on you, the more cash you’ll want to keep in an emergency fund.
7. Plan for the Future
One of the best uses of a windfall is to put the money to work through long-term investing. Think about your long-term goals. You may want to save for a home down payment or your children’s education. If your retirement savings need a boost, this may be an opportunity to increase your contributions.
“A $1,000 to $10,000 windfall is certainly nice to receive, but that’s generally not going to move the needle much for a long-term lifestyle adjustment,” Hendricks says.
“But $10,000, $100,000 or more? This very well could be a meaningful sum that could make an impact on lifestyle or potentially allow for an earlier retirement if handled properly,” he adds.
For instance, if you’re 30 years old and invest $100,000, you would have $1,744,940 at age 60, assuming a 10% annual return.
No matter how much you have to work with, your financial advisor can recommend different investment vehicles.
8. Manage Tax Consequences and Support a Cause
Be aware that some windfalls are subject to federal income tax. If yours is taxable, the lump sum may not be as much as you think. Here’s how the IRS typically treats common types of lump sums for federal tax purposes.
| Lump sum | Generally taxable | Generally not taxable | Maybe |
| Severance pay | X | ||
| Inheritance | X
Inherited assets themselves may not be taxable, but any income they generate, such as interest, dividends or rents, generally is. |
||
| Cash gift | X | ||
| Life insurance death benefit | X
Interest earned on policy proceeds or from certain transferred or sold policies may be taxable. |
||
| Performance bonus | X | ||
| Award for personal injury | X
In most cases, damages for physical injuries or sickness are not taxable. However, punitive damages, interest and amounts received for lost wages may be taxable. |
||
| Gambling winnings | X | ||
| Disability back pay | X
Disability back pay is generally taxable if it comes from Social Security Disability Insurance (SSDI), but not if it comes from Supplemental Security Income (SSI). |
||
| Found money (“Treasure trove”) | X | ||
| Tax refund | X
State and local tax refunds are usually not taxable, but a refund from a prior year may be taxable if you itemized deductions and received a tax benefit. |
||
| Divorce property transfer | X |
If the money you receive is subject to taxes, you may be able to lower your tax bill by donating to an IRS-recognized charity.
Even if you take the standard deduction, in 2026 you can claim a cash contribution deduction of up to $1,000 as a single filer and $2,000 if you’re married filing jointly. If you itemize, you can deduct cash donations up to 60% of your adjusted gross income (AGI).
Not only can your charitable contribution reduce your tax obligation, it can help support a cause that’s meaningful to you.
9. Get Organized and Enjoy Yourself
Whether you’re one of the Great Wealth Transfer recipients, have a big settlement check or cleaned up at the blackjack table, follow this checklist to stay on track:
— Take stock of your emotional state before making important decisions.
— Keep your new financial circumstances as private as possible.
— Avoid major purchases for at least six months.
— Delete high-interest debt.
— Establish an emergency fund.
— Meet with a qualified financial advisor.
— Understand the tax implications and explore ways to lower your tax liability.
— Prioritize how you’ll use the money based on your financial goals.
Once done, return to your list of dream items. Which do you still have the money for and which would make you the happiest? It doesn’t have to make sense to the rest of the world. As long as the splurge is personally fulfilling and you have the means, you’re ready to enjoy it.
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9 Ways to Spend a Windfall Wisely originally appeared on usnews.com
Update 07/17/26: This story was published at an earlier date and has been updated with new information.
