How to Handle One-Time Income

When it comes to dealing with cash, you have a range of different options. Before you blow it all on frivolous expenses, take a beat, make a plan, and follow these easy steps.

Have you ever been excited to receive a big chunk of unexpected income, only to find yourself later wondering where it went? Whether it’s a tax return, a bonus at work, a contract job, or an inheritance, intelligent budgeting can help you make the most of any one-time income and help you keep track of it too.

When it comes to dealing with cash, your options include paying off debt, giving, investing, saving, and spending. With so many options, a little forethought can go a long way in your financial success. Before you part with your money, consider the following steps.

Plan ahead

Seeing a large number sitting in your bank account—or a large stack of cash in your dresser drawer—can all too easily burn the proverbial hole in your wallet before you’ve had a chance to make an informed decision. If you know when you’re set to receive a payout in advance, use that time to plan what you’ll do with the bonus money.

If the income is unexpected, such as a larger-than-anticipated tax return, the wise step is to take some time to plan out where the money will go before you touch it. Don’t forget about taxes; work bonuses and other large chunks of money are often subject to hefty tax rates, so wait until the check clears to plunge ahead to the next step.

Pay off debt

Got debt? Consider using your one-time income to put a dent in it. Making an extra car payment may not feel as exhilarating as the day you drove that new car off the lot, but it’s a step toward the exciting feeling of being debt-free. A large chunk of unexpected cash may be just what you need to pay off the last of that financed TV or nagging student loan. Even a small amount can be applied toward the principal of your loan—just make sure to specify PRINCIPAL on the check you send—which will reduce future payments. In addition to peace of mind, your bonus payment will be all the money you’ll save by avoiding months or years of paying interest.


You may not feel rich, but chances are good that if you’re reading this article, you are among the wealthiest one percent of the world’s population. If your one-time income is truly extra (read: you aren’t depending on it to pay your bills), why not consider sharing with someone less fortunate? Whatever you feel strongly about—whether it’s human rights, homelessness, or saving the planet—can lead you toward a charitable organization where your donation will help further the cause. Just make sure to do your research, and consider both local, national, and global groups. If you are part of a local church or volunteer at a food pantry, you can see exactly where your money will be used. Or maybe you know someone who is struggling financially, and covering their electric bill or car repairs will help them through a rough patch. Giving may not be the most lucrative option, but when you find a situation that feels right, giving can be the most rewarding way to handle your one-time income.


If you’re looking at a multi-thousand dollar inheritance, you’ll want to talk to a financial advisor about your options for investing. The right choices can result in even more extra income as the interest accrues in your bank account. You can also invest in yourself, in a business, or in something that will save you money later. If you’re always forking over cash for fresh bakery bread, maybe you could invest in a bread machine. Is your dream to be a chef? Investing your own money in culinary school, some high-end cookware, or ingredients to start your cupcake business may be just the push you need to make those dreams come true, and once you start to taste success, your investment will be worthwhile.


When it comes to money, saving is usually the safest plan. You can save for a rainy day, an emergency fund, or set a specific goal that inspires you to tuck that money away. Instead of financing a new car, a vacation, or season sports tickets, use your one-time income to save up for it. With a retirement fund, you can use today’s hard earned bonus to save for the day you can finally quit working. If you ever tried to stuff five dollars of birthday money into your piggy bank, you already know how to save. It’s the tried-and-true way to avoid buyer’s remorse.


If your bills are covered and your debt is under control, it’s okay to spend a little, especially if the one-time income is truly bonus money. Consider giving yourself a percentage to spend; for example, one third to debt, one third to a savings account, and a third to spend. Or get out of debt sooner by putting 90 percent into debt and taking a shopping spree with the 10 percent left. There’s no strict rule for how to spend your one-time income, and the ways to spend it are endless. Just take your time, and make sure you can spare the extra cash before you hit “checkout” on your virtual shopping cart.

Next time a one-time payment comes your way, be prepared. Whether you choose to save, spend, invest, give, pay off debt, or a combination, make it a choice that you’ll be happy with for a long time to come.

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