What to Do With Found Money
By Steve Gillman - February 1, 2013
Last spring I was expecting a semi-annual royalty check of
about $800 from Wiley and Sons Publishing, for sales of my book,
101 Weird Ways to Make Money. I was shocked and happy to see
that the check which arrived at the end of April was for over
$5,000. My wife and I celebrated with an inexpensive night out
and I split the rest of the money between our investment account
and a car fund that we would use to purchase our next vehicle.
I am not suggesting that any reader do the same when dealing
with unexpected income, or what is often referred to as "found
money." But I do have a few thoughts to share about what
to do in a situation like this. It is a mix of the practical
and philosophical, and I happen to think that, when used properly,
philosophy is very practical, as is knowledge of psychology.
Sometimes you might actually find cash or valuables that can
be turned into cash. We've probably all found lost money once
or twice, and recently, while cleaning out an investor's recently-purchased
house (a part-time job), myself and the other guys found hundreds
of bags of golf tees in boxes in the garage, and though we threw
most of them in the garbage I took 55 of them and sold them for
$40 to a small golf shop. Sources of larger amounts of found
money might include inherited money, unexpectedly large tax refunds,
lottery or contest winnings, and selling some old collectible
toys or antiques from the attic on eBay for hundreds or thousands
What do you do with found money? The most common response
is perhaps to spend it on some luxury or frivolity, a decision
perhaps helped along by the thought that you didn't have to work
for the money. Of course you could use the money to better your
situation and/or pursue more important goals and values. Fortunately
there is also the option to do both. For example, suppose you
get an unexpected $1,000 bonus from your employer. Why not use
$200 of it for fun activities or purchases, and then put the
other $800 toward credit card debt or start a fund for a future
business or investment?
A $3,000 income tax refund, which isn't all that uncommon,
can really help out with important goals. Suppose, for example,
that you typically find yourself in financial trouble several
times each year due to an unexpected car repair or a doctor's
bill or a broken appliance. Why not use that tax refund to start
an emergency account. In fact, if you put your refund in the
account every year and use it only for large unexpected expenses,
you might no longer have stressful surprises. You are buying
as better quality of life.
It might be a good idea to reward your wise "money stewardship"
with a bit of play money for your short term pleasure. But if
you repeatedly use the bulk of found money for important purposes
it's a habit that can really change your life.
Found Money and Personal Values
My friend, who I will call Kyle, won a million-dollar lottery
a few years ago here in Florida. My guess is that he got about
$650,000 after taxes. He bought boats and a house, the latter
for $200,000. He spent quite a bit on more lottery tickets of
all things (you already won man!), and invested quite a bit in
stocks. He is doing well, but still works to pay the bills.
Now, we all can play the mental game of "what I would
have done," when we hear a story like this. I know what
I value, so I have a good idea of what I would do with that kind
of found money. I value freedom, including freedom from the necessity
of jobs or complicated businesses. I'm not lazy, but I prefer
to work when I want and on what I want, and without too much
regard to whether it will pay the bills (this website no longer
does, but here I am). I would have found a way to invest that
$650,000 and get a safe 8% return, perhaps partly in rental real
estate. The $52,000 in annual investment income would be enough
to live comfortably, leaving me free to take -- and quit -- any
job, or start any small business that seemed interesting, or
to write all week long instead of interrupting this work to earn
I'm not saying that there is anything wrong with what Kyle
has done. He knows better than I what's important to him, and
he seems happy enough. And if some lottery winners spend it all
on big toys or parties, perhaps that what works well for them.
But I suspect that most people don't spend enough time getting
to know what's important and what makes them happier and how
to get it. As a result many people squander the opportunity that
found money represents.
There are opportunities with both smaller and larger amounts
of found money. For example, if you win a bingo jackpot of $500
it might help you fund some future plan, especially if you keep
putting other unexpected profits and income toward that goal.
A few hundred dollars here and forty dollars there and eventually
you can take time off to write that novel or climb that mountain
or build that sailboat. Or you can spend those monetary surprises
on another TV or a facelift or a trip to the beach. The choices
are all yours.
Coming into a few hundred thousand dollars can quickly change
things if you use it wisely. But again, the choices are yours,
and to make them wisely you have to know what matters to you.
You might think you want more time to spend with the kids, but
if you spend your windfall instead of investing it, and so have
to return to work, you made your choice. We say we value certain
things, but when we have the power of large amounts of money
we also demonstrate what we value in how we use it (and the same
can be said for time).
Tax refunds are coming soon for some of you, so there are
choices to make...
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