How to Handle an Unexpected Financial Windfall

The word windfall was first used in the fifteenth century, and the meaning was quite literal, referring to ripe fruit blown from trees by the wind. Whoever happened upon the bounty of the fallen fruit would benefit, without any effort put into acquiring the fruit or payment required for eating it. In short, an unexpected good fortune.

What constitutes a financial windfall?

Today, a windfall refers to money you weren’t expecting and/ or may never receive in such a large sum again. While a windfall is relative in amount to each household, it is more than you’ve seen at one time.

A windfall is different from retirement money you’ve been saving over the years because it comes all at once. And because a windfall usually accompanies some sort of shift in your life, it can have some complex emotions attached to it. The pressure of figuring out how to handle such a large sum of money — in addition to the associated emotions about where the money came from — add a layer of complexity to managing the money.

Here are some examples of windfalls and associated complex emotions we’ve seen our clients experience:


Inheritance. You’ve lost someone and received money from their estate. This type of windfall may produce feelings of relief, sadness, overwhelm, and guilt

Divorce Settlement. Even if you wanted or initiated the split, divorce is never a pleasant experience. If you received a large sum of money, you likely had to fight for it. If you were not the family breadwinner, it may be daunting to look ahead at how the money could potentially impact your future and lifestyle.

Sale of a Business. You sell the company you’ve been building over the course of your life. While selling your business for a large sum may be a dream come true, it could also bring up issues of identity and purpose.

Sale of Large Real Estate. You profit from land that has been in the family for generations but can no longer be contained. Selling a legacy property can bring up feelings of guilt or grief.

So, how do you make this windfall work for you without letting your complicated feelings get in the way?

Make money work to your advantage:

Take some deep breaths and set aside time to make mindful decisions. Don’t rush into anything!

Think about your current life and what you want your future to look like. Ask yourself:

  • How can this money help me to achieve both immediate and long-term financial goals?
  • Do I need to pay down debt and/or build my emergency fund before I use the money elsewhere?
  • What are you hoping to earn and why? Determine objectives for how you want to structure your money.

Talk to professionals.

    • If you don’t have a financial advisor already, now is the time to talk to one. Look for a Certified Financial Planner who is bound to a fiduciary oath and will help plan for your best interest.
    • Consult a tax professional so that you understand the tax implications for this new money
    • Consider talking to a therapist. A new influx of money can trigger behaviors that could jeopardize the longevity of a windfall or the health of the recipient. Better to get out in front of it.

Plan for the future of your loved ones by updating your estate plan.

It’s okay to live a little! Do something nice for yourself and the people you love. Just be sure that your “fun spending” is in proportion to the windfall you received, and that the spending is built into a bigger financial plan.

Avoid these financial pitfalls:

Ignoring the money. A true windfall can be life-changing for most people, but letting it hang around without an investment plan can result in leaving money on the table. So, don’t stick the money under the mattress. Instead, find a safe place to hold it— like a bank savings or money market account—while you work out your next steps

Spending out of proportion. It’s not a bad idea to splurge a little, but spending out of proportion to your overall financial scope can cause traumatic backlash in your financial situation. A vacation home in the South of France sounds amazing, but can your long-term financial plan really support such a purchase?

Fearing the funds. Often, windfalls come to those who have not previously had wealth and, and so the recipients may not know where to start or who to trust. Someone who receives a windfall may never have worked with a CPA or any other type of advisor, and they may feel like they don’t even know how to approach a financial professional. If you’re in that boat, you’re not alone. But it’s important that you find someone who will look at your newly acquired money in a holistic, compassionate, and thoughtful way.

The views stated in this letter are not necessarily the opinion of Cetera Advisor Networks LLC and should not be construed directly or indirectly as an offer to buy or sell any securities mentioned herein. Due to volatility within the markets mentioned, opinions are subject to change with or without notice. Information is based on sources believed to be reliable; however, their accuracy or completeness cannot be guaranteed. Past performance does not guarantee future results. Investors cannot invest directly in indexes. The performance of any index is not indicative of the performance of any investment and does not take into account the effects of inflation and the fees and expenses associated with investing.

For a comprehensive review of your personal situation, always consult with a tax or legal advisor.  Neither Cetera Advisor Networks LLC nor any of its representatives may give legal or tax advice