Surprise Income: The Do’s & Don’ts

When I was in college, I had two extra holidays on my calendar: “Tax Refund” Day (I was always working or doing an internship) and “Student-loans-were-dispersed” Day. I celebrated these holidays every year…I decorated my closet with new clothes. I ate (sit-down restaurants), drank (top shelf baby), and was definitely merry. I told myself that if I got money that I didn’t expect, I could blow it all without feeling guilty…after all, “unaccounted for” money did not exist. That means that refund checks, birthday money, and even the “gas money” my grandmother slipped me every time I went to visit, all disappeared without a trace.

Now that I’m focused on paying off my credit card and my student loans, I’ve developed a new attitude towards these little surprise gifts. I no longer rush out and buy the things that spark my curiosity, but I don’t value enough to spend my hard earned money on. I no longer view these unexpected windfalls as a reason to order the $8 dessert and try the $10 mixed drink. Now my “unaccounted for” money not only exists, but plays a part in bringing me closer to my financial goals. Here’s how you can make your surprise money work for you:

•  Make an extra payment on your debt. When trying to get out of debt, every little cent counts. Make an extra payment and bring yourself one month closer to being debt-free. Also, the quicker you decrease your outstanding balance, the less interest you have to pay.

•  Add to your savings. An emergency can occur at any time, so you should be prepared for whatever life throws your way. Once you establish an emergency fund to cover any unexpected misfortune, you can move on to saving for a vacation, a wedding, or even your first house.

•  Buy something that you need, but have been putting off until you can afford it. I’ve seen people wear the same pair of glasses for years, even though their prescription has changed. I’ve seen others give their car a jump off every couple of weeks because they couldn’t afford a new battery. Sometimes that cash bonus is just enough to cover those expenses that you have needed to take care of, so why not use it for that purpose?


I cannot close this article without giving you suggestions on what NOT to do with your money. Just so we are clear, these surprise sums of money are not an excuse to:

•  Go on a shopping spree


•  Gamble


•  Spend all your money on something that will cost you in the future (like a down payment on a new Ferrari, which will take you at least the next five years or more to pay off)


Having more money makes you more capable of paying off your debt, not serve as an encouragement for you to create new debt. Any extra income you earn or receive should improve your financial situation, so treat your surprise income as a shortcut on your journey towards financial freedom and not as a pit-stop along the way.