‘Where did the money go ?’ How to handle a bargain

Tax refund. Child tax credits. COVID-19 relief checks. We dream about the next unexpected bundle of cash that lands in our lap. It might be a few hundred dollars from a yard sale, maybe even more from a job bonus — or hundreds of thousands from a winning lottery ticket or inheritance. . Our minds race with the possibilities.

A windfall can either be a lifeline for short-term financial relief or a stepping stone to long-term financial stability. But due to our inherent financial personality, we cannot make the most of surprise money.


A 2021 study published in the Journal of Family and Economic Issues found that emotions related to money can dictate whether we decide to spend or save on a windfall — even in a crisis environment.

The research looked at how recipients of COVID-19 relief checks used the money. People with existing financial resources who were previously inclined to save and invest did just that with the COVID-19 windfall, says Sarah D. Asebedo, lead author of the study. Asebedo holds a doctorate in financial planning and is an assistant professor at Texas Tech University in Lubbock, Texas.

“When people with these characteristics enter crisis environments, they likely have developed some resilience in their financial situation, such as an emergency fund or investments,” Asebedo says. “So they could use their windfall for things like ‘cravings’ or saving and investing more, because that’s what they’re wired to do to some degree.”

Those who needed to make ends meet during the pandemic mainly used the money to pay off debt, Asebedo adds.


How you handle a windfall, whether it’s a federal stimulus check or an inheritance, has a lot to do with how you handle money on a day-to-day basis.

Thomas Shortreed, a behavioral financial advisor in Cortland, Ohio, uses a questionnaire to determine a client’s financial personality. It provides insight into our relationship with financial matters. Questions include:

— How emotional are you about money?

— Would you rather save or spend?

“Do you think about your decisions?”

“How confident are you?”

— How involved are you in financial decisions?

Based on how you answer questions, your personality type is identified, says Shortreed. “I can look at this personality type and get a general idea of ​​how you probably think about and process decisions about money.”

Personality types include Money Master, Optimist, Perfectionist, Producer, and Safety Player. You can find similar currency personality tools online.


Your mind may also react in different ways to the type of boon you receive.

In many cases, windfall gains earned, such as a job bonus, trigger longer-term attention to how the money is spent, Shortreed says. There’s often a bit more care in spending it wisely.

However, sudden unearned money – like winning the lottery or receiving an inheritance – may trigger a different reaction. Because it didn’t work, he says, in many cases it was spent recklessly.

“Money is very emotional. It feels good in the short term to buy things you haven’t had or never wanted.

An example: Shortreed advised certain members of a group of lottery winners.

“Those I have dealt with have set aside money for their children’s college. The others were buying all kinds of fun stuff. My clients had their kids through college and had peace of mind.


The debt can be erased or reduced with a windfall. But often, we repeat the same spending mistakes later, without succeeding in breaking the recurring debt habits.

When a deal is received, Shortreed suggests:

— Pause and reflect on good and bad financial decisions from your past.

— Focus on medium- and long-term goals, not short-term desires.

— By taking into account your fundamental values ​​(family, security, autonomy, etc.).

— Review your financial personality type.

— Ask a partner to help you hold yourself accountable.

The key to getting the most out of a bargain: take your time.

“Put some separation between receiving that money and using that money. Give yourself time to sort through all those emotions. You might get excited at first, then for some reason you might get a little stressed or worried about using it properly,” says Asebedo.

Consider your attitudes about money, your values ​​and your long-term goals before receiving a windfall to help relieve that stress, Asebedo adds.

“Thinking about some of these things before you get a bargain is healthy because if and when you do eventually get a bigger lump sum, you’ll be more psychologically prepared to make a decision that will do you good later.”


This article was provided to The Associated Press by personal finance website NerdWallet. Hal M. Bundrick, CFP is a writer at NerdWallet. Email: [email protected] Twitter: @halmbundrick.


NerdWallet: What is your financial personality? Take our quiz to find out https://bit.ly/nerdwallet-money-personality

Hal M. Bundrick of Nerdwallet, The Associated Press

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