You can’t always plan for it, but windfalls do occasionally happen. If you’ve received a cash gift or other kind of windfall, like a tax refund, then you might be wondering how you should use it. And the answer will depend on your situation. In this post, we’ll talk about how to prioritize your needs and wants so you can decide what makes sense for you given your circumstances and what’s most important to you right now. And you’ll hear ideas from various Goodbudgeters to give you some imagination for what you might do based on your needs and desires. While it might feel like this money just fell out of the sky, it’s important to prioritize before that “free money” is gone and no longer available for your most urgent needs or your most important goals.

So, take a step back and reflect on your current situation. And then think about using your windfall roughly in this order of priority starting with your Urgent Needs all the way through to Fun.

1. Urgent Needs & Bills

“Rent.  I wish it was extra for me like it is for so many but it’s a blessing either way” – Danielle

“Given that our family has had some reduction in income during the pandemic, the stimulus check (when it comes) will likely help us pay for our rent, groceries, and other household expenses.” – Dale

The first priority for your cash gift or stimulus check is things like food, medicines, rent, and utilities. Anything that keeps you fed and housed. If that’s as far as your check goes, that’s okay. You’re making a good choice to prioritize and cover your basic needs. And if you haven’t already, now’s a good time to build your lean budget.

2. Emergency Savings

“Savings – because I don’t believe all this is over yet.” – Joan

“Funded emergency fund” – Jason

Once you’ve taken care of your urgent needs and bills, take a look at your emergency fund. Replenish it if it’s been depleted. And you can also consider beefing it up depending on your situation and outlook.  For example, a few reasons you might want a larger emergency fund could include: high cost of living in your area, higher number of people in your household, irregular or unstable income, medical needs. Even when the economy is booming, an emergency fund can help you weather financial storms; and in a recession, it’s more likely that you’ll tap into your emergency savings at some point if you haven’t already, so putting your windfall here would be a wise move.

3. Needs you’ve been putting off

“I need new tires on my car. Just thankful I still have a job right now.” – Denise

If you’ve taken care of urgent needs as well as set aside cash for emergencies, start looking at needs you’ve been putting off. That might include new tires for your vehicle or fixing a leaky faucet. These are things you can live without for a while, but if you leave it too long, it will cause you a bigger headache. If you spend your bonus money on non-urgent, but needed maintenance like this, you’ll avoid bigger financial problems down the road.

4. Goals & Giving

“Paid off the cars.” – Jason

“Donating some of it for a good cause.” – Denise

Now, if your urgent needs and bills are covered, your emergency fund is looking healthy, and all your non-urgent needs are taken care of, you’ve got some flexibility.  Look at how you’re doing with your money goals — like debt payoff, saving for vacation, retirement, or college. Your cash gift or stimulus check could give you a boost as you work toward your top money goal. And think about how you might adjust your giving plan — gifting most or all of your windfall could provide much-needed support for causes you care about. After you’ve thought about your options with goals and giving, pick what’s most important to you and put the check toward that.

5. Fun!

“Supporting local business, and buying things that’ll help ‘stimulate’ the economy. New bed for my daughter, camera for me, and sewing machine for the wife.” – Todd

“Hoping to spread it around by supporting local small business, shopping where I might not normally shop, getting takeout until restaurants reopen, etc.” – Deb

If you’ve taken care of all your needs and emergency fund, plus you’re making good progress on goals and giving, you could spend a portion on something fun.  Or if you’ve taken care of all of your needs, emergency fund, goals, and giving, you could spend the entirety of your windfall on fun! And while you’re having fun, you can support local small businesses by buying from them (or buying gift certificates) to help support your local economy.

Now that you’ve got a sense of priorities, it’s time to decide how to use those extra dollars.  You can use it all on your top priority. Or, if you’ve got money left over after your top priority is covered, you can use the rest for your next priority.  And especially when it comes to goals, giving and fun, you can mix and match.

And again, remember, there’s no one “right” way to use it. How you use that money will be a judgment call based on what you need and what’s most important to you.