Incorporating Unexpected Cash in Your Financial Plan

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5 Ways to Incorporate Unexpected Cash in Your Financial Plan

Receiving an unexpected sum of money can be a welcome surprise, but deciding what to do with it can be a challenge. Should you save the money or pay down debt? Invest the funds or donate to charity?

Published: May 2, 2024

While rushing to book a vacation with proceeds from a windfall may be tempting, it might be more rewarding to use the funds to shore up your finances for the long run. Here are five strategies to consider:

Grow your emergency fund
A robust emergency fund provides security for financial emergencies. Even if you feel confident about your emergency savings, padding your fund with some of your windfall money can further prepare you for financial curveballs, especially in an uncertain economy.

Save for retirement
Adding a windfall to a tax-advantaged retirement account can be a powerful way to potentially grow that extra money over time. If you have a 401(k) through an employer, you won’t be able to contribute a lump sum to that account, but you can open a traditional or Roth IRA and fund it with your windfall. The 2024 contribution limit for either type of IRA is $7,000 for people younger than 50 and $7,500 for those older than 50.[1]

Invest for the future
If you’ve maxed out your tax-advantaged investment options, investing through a taxable brokerage account may be the next best way to turn a lump sum of cash into long-term wealth. A financial planner can help determine how to invest to complement your tax-deferred portfolio to help you achieve long-term financial goals.

Prepay your mortgage.
A windfall can make a big impact on your mortgage, depending on how much you owe. If you are considering this choice, be sure to ask your lender to put the windfall toward paying down your loan principal, which will reduce your interest payments long-term.

Before prepaying debt, consider opportunity cost, the idea that money used for one purpose can’t be used for another. Paying down debt could make the most sense if interest payments on the debt are higher than expected returns from your investment portfolio, for example.

Donate to charity
Contributing to causes you care about is a simple way to put your values into action and do good in your community while also reducing your tax liability. In most cases, you can deduct up to 60% of cash contributions to public charities, including donor-advised funds.[2]


Choosing the best option for you                       

The best use of a windfall depends on your individual circumstances. If you’ve already maxed out your retirement accounts, paying down your mortgages or donating to charity to reduce taxable income may be a better fit. You can also split a windfall among several options to maximize your advantages.

Additionally, before you spend any of your windfall, you’ll need to determine if you owe taxes on it. Cash gifts under $18,000 from individuals are generally not taxed,[3] but other lump sums you may receive, like a bonus from work or lottery winnings do count as income and you’ll be taxed accordingly.

Determining the best use of a windfall can be challenging, especially if you feel pulled in multiple directions. Work with your financial advisor to figure out the best course of action as part of a long-term wealth management plan.


1 “401(k) limit increases to $23,000 for 2024, IRA limit rises to $7,000.” Internal Revenue Service, 1 Nov. 2023,
2 “Charitable Contribution Deductions.” Internal Revenue Service, 25 Aug. 2022,
3  “Frequently Asked Questions on Gift Taxes.” Internal Revenue Service, 27 Oct. 2022,,exclusion%20for%20the%20calendar%20year.

Material provided by Oechsli, an independent third-party. Raymond James is not affiliated with Oechsli.  



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1 2024 Forbes America's Top Wealth Management Teams Best-in StateThe 2024 Forbes ranking of America’s Top Wealth Management Teams Best-In-State, developed by SHOOK Research, is based on an algorithm of qualitative criteria, mostly gained through telephone and in-person due diligence interviews, and quantitative data. This ranking is based upon the period from 3/31/2022 to 3/31/2023 and was released on 01/09/2024. Advisor teams that are considered must have one advisor with a minimum of seven years of experience, have been in existence as a team for at least one year, have at least 5 team members, and have been nominated by their firm. The algorithm weights factors like revenue trends, assets under management, compliance records, industry experience and those that encompass best practices in their practices and approach to working with clients. Portfolio performance is not a criteria due to varying client objectives and lack of audited data. Out of approximately 10,100 team nominations, 4,100 advisor teams received the award based on thresholds. This ranking is not indicative of an advisor's future performance, is not an endorsement, and may not be representative of individual clients' experience. Neither Raymond James nor any of its Financial Advisors or RIA firms pay a fee in exchange for this award/rating. Raymond James is not affiliated with Forbes or Shook Research, LLC. Please see more info.