What to Do When You Have a Sudden Wealth Event

Whether it’s a bonus, inheritance, stock option payout, or other unexpected gain, coming into extra money can bring both excitement and uncertainty. You might feel a mix of gratitude, possibility — and pressure to “do the right thing.”

In 2024, the average work bonus was roughly 2.8% of an employee’s annual salary. While that may not be life-changing, other windfalls — a generous gift, a legal settlement, or proceeds from a business sale — can significantly shift your financial landscape.

No matter the size or source, a thoughtful plan helps you make the most of your good fortune.

Pause Before You Act

It’s natural to want to celebrate or make quick decisions, but resist the urge to act right away. Take time to reflect on your goals and values. Ask yourself:

What do I want this money to accomplish?
How does it fit into the bigger picture of my financial life?
Are there emotional or family dynamics that might influence my choices?

“A windfall provides opportunity, but also responsibility — it’s the perfect time to align your money with your meaning.”

Think About the Future

Review your retirement savings: Revisit your 401(k), IRA, or Roth accounts to see if you can boost contributions.
Invest intentionally: Don’t rush into new investments without a plan. Consider your time horizon, tax situation, and risk tolerance.
Build or replenish your emergency fund: Having at least 3–6 months of expenses saved helps keep your long-term investments untouched during unexpected events.
During retirement, it's good to have 2 year's worth spending in cash savings.

Address Debt

Debt can cast a long shadow, and using a portion of your windfall to pay it down can create lasting peace of mind.

Tackle high-interest balances first: The average credit card interest rate hovers around 20%.
Evaluate student loans or your mortgage: Explore whether lump-sum payments or refinancing makes sense.

Support Family Goals

If you’re raising kids — or helping adult children or grandchildren — your priorities may include:

College savings: Contribute to or open a 529 plan.
Future financial security: Consider how your windfall can support family goals while balancing your own needs.

Plan for Big Purchases — or Experiences

Your windfall might help fund a home purchase, renovation, or even a dream vacation. The key is to plan intentionally:

Set aside a portion for enjoyment — guilt-free.
Allocate the rest toward long-term goals that bring you lasting satisfaction.

“It’s okay to have fun with it — just make sure your future self will thank you too.”

Don’t Overlook Taxes and Protection

Not all windfalls are created equal — some come with tax implications or new risks.

Set aside funds to cover income or capital gains taxes if applicable.
Review your insurance coverage — your increased net worth may warrant additional umbrella or life insurance.
If your windfall included illiquid assets (like real estate, private company shares, or business interests), consider diversification or professional management.

Revisit Your Plan

Large financial changes should trigger a review of your entire financial picture:

Update your estate plan and beneficiary designations.
Reassess your risk tolerance and investment strategy.
Consider charitable giving — either direct donations or through donor-advised funds — to make a lasting impact in a tax-efficient way.

To help you think through next steps, I've included a resource: What Issues Should I Consider If I Experience a Sudden Wealth Event

The Bottom Line

Whether it’s a modest year-end bonus or a life-changing inheritance, a windfall is an opportunity to realign your financial plan with your life goals. The best outcomes come from balancing joy and generosity with clarity and structure.

If you’ve recently received — or expect — a financial windfall, I can help you evaluate your options, address taxes, and create a plan that reflects both your values and your vision for the future.