If the name is not explicit enough, found money “refers to any amount of money that has been rediscovered after being forgotten about or abandoned by the rightful owner”(1). In other words, the money you end up getting when you least expect it, like an inheritance from a distant relative, an unexpected bonus, a government stimulus or the dollars you find in an old jacket’s pocket (to a smaller degree, that’s also fund money).
Whatever “vehicle” the extra money reaches you, determining how to use those funds, in a smart way, might be challenging. If the money comes at a time when you can barely make ends meet, then, it’s more than obvious what the money will go into – bills, bills and more bills. What you need to keep in mind is that found money is your lucky break, your opportunity to improve your life a bit, even if it’s only for a little while.
If you happen to become the happy recipient of an unexpected amount, here’s how you can use it in a smart and efficient way. It doesn’t matter if it’s a little or a lot. You just need to hold your horses when it comes to deciding things, avoid making impulsive decisions and make that money work in your favor. Here’s how.
Build a solid emergency fund
Step one: put some money aside for rainy days. It’s no secret that 2020 has not been the greatest year. Millions of people all over the world, including in the United States, have been affected by the coronavirus crisis, either by losing their jobs or being laid off. Apart from making us appreciate our lives and families more, much like every other crisis in history, the latest economic upheaval reminded us of how extremely important it is to be prepared for emergency situations, financially wise.
If you can, try to build an emergency fund to cover your bills for at least three to six months. Most importantly, don’t touch that money unless you’ve got a real emergency.