Many of us have a basic idea on how to budget our regular payday salaries, but how do we budget/spend a sudden windfall, i.e. a bonus, extra allowance, or just your ordinary profit from the sale of a stock.
I had a sudden windfall from the combination of cash dividends, stock sale profit and an allowance from work (unexpected since I don’t keep track of when those are given). I try to live off and only anticipate my ordinary payday income so that I’m forced to live below my means.
How I “spent” the sudden cash
Here is a detailed breakdown:
1. 100% of stock sale profit– I use the term profit because I already deducted the capital and put that back in my stock portfolio so it can keep making me free money. I put all the profit in a separate savings account for a specific project that I’m saving for. I call this my project account.
2. 100% of stock dividend – went to my passbook account for long-term savings (emergency fund). I use a passbook to keep this money far from my reach since it’s such a hassle to withdraw from.
3. 22% of extra allowance– I used this to pay for SSS quarterly contribution.
4. 11% of extra allowance– deposited in my project account. I’m not perfect and when unexpected expenses come up, I borrow from my project account but I consider such amount an account payable to myself- so I now paid it back, to myself.
5. 30% of extra allowance -deposited to passbook account.
6. 20% of extra allowance– deposited to stock account to be used to invest in more equities.
So, what’s left to spend? Haha. There’s still some. I try not to totally deprive myself lest I get into a shopping binge. Lessons learned from my shopping-happy past. In sum, I allocated and saved/invested 83% of the total windfall and set aside 17% thereof for discretionary spending.
How do you budget a sudden windfall?