budgeting unexpected money?

[statsman]

Interesting question, and one that I think I would answer differently than most here. DW and I are very conservatively invested. Almost 5 years into retirement, and our WR has been less than 0.4%/year. DW is drawing SS, but I am not, so there's that to consider.

Now, the bond funds cratering hasn't helped with my nerves, but it may not make too much of a difference long-term. Or at least I hope. If we came into several hundred thousand or even a million, I could see us investing most of it in stock funds (gifting the rest to family).

Many here would be appalled at just how stock averse we are. But this kind of windfall would truly be "free" money, so investing in stock funds may help balance a portfolio a bit that is heavily tilted to fixed income assets.

 

[FIREarly]

Pizza Party!!

 

[big-papa]

The only unexpected money I've received has always been, to a degree, expected. That is, I've never counted on or made spending adjustments due to estimated future proceeds from stock options, RSU's, bonuses at work, ESPP or, in one spectacular case, a very nice severance package. And it would truly be unexpected if some unknown relative passed and left a bundle to me.

Unless the money is immediately needed for something (new car, roof, whatever) I've always invested it. Doing so over the years has greatly accelerated my path to retirement which will happen this year.

Cheers.
Big-Papa

 

[DrRoy]

Spend some, save some.

 

[livingalmostlarge]

Cash hit account today and I decided to earmark 5% for spending on what i don't know yet. Rest went to fill kids 529, taxes, and investments. I don't think i'm going to buy the rental i was thinking off. Other thread about rentals makes me think maybe a bond ETF or something short term. Suggestions for short term so in case i change my mind about rentals would be appreciated.

 

[Badger]

We had a budget of sorts while we were working while living a very frugal lifestyle. Since we have been retired we don't have one. Don't have to anymore. Because you asked what I would do then any unexpected money would be added to the money pot with a little taken out to play with. You may want a different plan.



Cheers!

 

[ncbill]

don't budget...keep track required expenses to make sure they're not getting out of hand.

track net income (negative) to make sure it's less than 3% of total portfolio.

 

[CRLLS]

What happens if you came into unexpected money? Save? Spend? Give? Gift to kids? What do you do?

We are going thru that recently. The amount was fairly substantial in our world but wasn't going to change our lifestyle one way or the other. We have done most all of it. Spent some, saved some, and gave some to kids.

 

[PandaBear]

It’s funny, I’ve been daydreaming about this recently.
I also know it’s likely I will someday inherit something in the neighborhood of 300-600k. Not a life changing amount for us and not needed for our budget, so I can play with it a little.

I want to endow two scholarships, at my parents and my in-laws Alma Mater. I’d like to leave an ongoing legacy in honor of these 4 wonderful people. And they were all very devoted to their schools. That’s about 50k each.

I also want to support better a couple of programs that are dear to my heart and not heavily funded. One is a program that helps support former foster children in college and the other is a program that places shelter animals with seniors, paying costs for vets, etc, so the senior has companionship even if they can’t afford the fees.

 

[OldShooter]

... I also want to support better a couple of programs that are dear to my heart and not heavily funded. ...

I have plugged community foundations before; Apologies to those who may be bored but I want to do it again.

https://www.cof.org/page/community-foundation-locator

I'm sure all are different, but we have been giving to the local community foundation and our estate will amp that up. They are a pass-through to fund places like animal shelters, scholorships, etc. A wide variety of causes within their geographic area. It's very efficient. There are only four people in the office and I hear regularly and personally from the executive director regarding how our fund is being used. (It's not a DAF; we fund it with QCDs but the foundation people know how we want the money used and will consult us on questionable ideas.)

So for anyone thinking as @PandaBear; is, I'd encourage you to check for and investigate a local community foundation.

 

[Sojourner]

The only unexpected money I've received has always been, to a degree, expected. That is, I've never counted on or made spending adjustments due to estimated future proceeds from stock options, RSU's, bonuses at work, ESPP or, in one spectacular case, a very nice severance package. And it would truly be unexpected if some unknown relative passed and left a bundle to me.

Unless the money is immediately needed for something (new car, roof, whatever) I've always invested it.

+1

My thoughts exactly. Truly unexpected money would be something like an inheritance or large gift from someone like an older friend or distant relative. Otherwise, any money I'll be getting is pretty likely to be something I'll have known about and expected to some degree.

If I did get some truly unexpected money (say, $50K from a close friend who named me in his will), I would spend a little of it ($5K), give some of it to charity ($5K), and invest the rest.

 

[kcowan]

When we retired, we never had any unexpected money but we planned for two inheritances withe suitable amounts and timing. One happened as we guessed 7 years later and the next 5 years sooner, and we gave it away and kept some. After the market swoon, we will commence giving away again.

 

[livingalmostlarge]

Nope it money from some stock that was completely unexpected. We just didn't expect it to pay out.