Paths to Financial Freedom

The potential of windfall income

Windfall income occurs when we receive a one-time influx of funds. Sometimes, we can predict when we’ll have a windfall but maybe not the exact amount (annual bonuses, tax refunds, etc.). Sometimes we may be able to predict the amount we’ll receive (selling investments or other assets). Other times, we may receive income unexpectedly (inheritance, unforeseen gift, etc.). While we shouldn’t presume on the future by counting on windfall income to help us meet our budget, planning in advance for the possibility of windfalls can help us make wise decisions with extra income. Here are a few tips to consider.

Giving. Windfalls, like all income, are ultimately a gift from God – regardless of what we may have done to earn them. As a result, we should consider returning a portion of them to God as an expression of our gratitude. Making this decision in advance can protect us from the temptation to use all the income for our own desires.

Saving. After giving, the next thing to consider is saving. Here are a few questions to guide your thoughts on saving from windfall income:

  • Do you have an Emergency Fund set up with at least $1000?
  • Do you have consumer debt (non-mortgage debt) to retire?
  • Do you need to add to your Emergency Fund to bring it up to 3 months’ worth of expenses?

Spending. Are there any priority expenses or items you need to purchase that don’t fit into your monthly budget? Examples might include vacation, car, appliances, etc. The key guideline here is whether an item has been on your “list” for a while, or whether it’s a spur-of-the-moment purchase. If it’s the latter, you may find yourself with buyer’s remorse a short time down the road.

How might this work in practice? Suppose I have the following:

  • Emergency fund with $7,000 in it (and $3,000 per month expenses to cover)
  • Credit card debt of $1,000
  • An appliance that needs to be replaced (research has determined a cost of $700)
  • Plans for a vacation estimated to cost $2000.
  • A car that will need replacing in a couple of years.

For the sake of this example, let’s say I prioritize use of windfall income as follows:

  1. Giving (10% of the income)
  2. $1,000 to retire credit card debt
  3. $2,000 for vacation (assuming it’s an important vacation)
  4. $700 to replace the appliance
  5. $2,000 to finish out the Emergency Fund
  6. Remainder to go to the car savings fund.

If I get a tax refund of, say, $3500, I would use it as follows:

  1. $350 for giving
  2. $1,000 to pay off the credit card
  3. $2,000 set aside for the vacation
  4. $150 saved toward the $700 appliance.

This example is not meant to dictate your specific priorities. Everyone’s situation is different – maybe the appliance needs replacing quickly and should be taken care of before the vacation. Perhaps the car will need replacing sooner rather than later and may need to be prioritized over adding to the Emergency fund. The point is that pre-determining priorities for windfall income can help us to make the best use of that income rather than wasting much of it on spur-of-the-moment spending.  Stewardship of windfall income is our response to God’s extra grace.

Grace, or Grabbing?

Truths That Transform: Grace, or Grabbing?

His name meant literally, “he grabs the heel”; figuratively, “he deceives”. And that’s the way Jacob lived his early years. He took advantage of a weak moment with his brother Esau, getting him to sell his birthright for a bowl of stew (Genesis 25:29-34). Later, he conspired with his mother to deceive his father Isaac into giving him the family blessing (Genesis 27), once again taking advantage of his brother.

Fleeing to his uncle’s household to escape his brother’s vengeance, Jacob encountered God at a place he named Bethel, and his transformation began (Genesis 28:10-22). God renewed his covenant promise – originally made to Abraham – to Jacob. Jacob believed God’s gracious promises of protection, provision, and a future, and he responded by committing himself to giving back to God (the second instance of tithing in the Old Testament) and devoting himself to the Lord.

Grabbing, however, was part of Jacob’s heritage, and he soon encountered his equal. He fled to Laban, the brother of his mother Rebekah (who had conspired with Jacob to trick her husband Isaac) and contended with him for 20 years. Tricked by his uncle into marrying Leah when he was in love with Rachel, Jacob later retaliated by manipulating Laban’s flocks in his favor (Genesis 30:37-43) and then by fleeing secretly when God told him to return to his father’s homeland (Genesis 31:20-21).

On the way back to his homeland, Jacob again encountered God (Genesis 32). This encounter, and the renewed assurance of God’s protection and provision, led to a changed attitude toward the brother he now realized he had wronged. Remembering his brother’s anger, Jacob feared retaliation. But he also trusted God’s promises and longed for reconciliation with his brother.

This reconciliation was more important to him than possessions and wealth (which had once been his primary motivation); as a result, he sent extravagant gifts ahead to his brother. No doubt Jacob wanted to appease Esau, but his response also shows a changed heart. Having tasted God’s grace and provision, he no longer put a top priority on worldly wealth. The one who once resorted to trickery for worldly gain could now say, “God has been gracious to me, and I have all I need.” (Genesis 33:11).

If we’re honest with ourselves and before God, we probably would admit that there’s a lot of Jacob in each of us. In our better moments, we trust fully in God’s grace and provision. Worldly wealth pales in comparison to living reconciled with God and with others. At other times, confronted by those who would take advantage of us or tempted by opportunities for worldly gain, we resort to grabbing. Perhaps we stretch the truth a bit on our taxes, take a little advantage of those who work for us, or settle for what is legal (as opposed to what is right) in a business deal.

Where do you find yourself today on the continuum between grace and grabbing? What do you need from God in order to edge a little more toward the “grace” end? Despite Jacob’s tendency to grab, God remained gracious to him and provided for him far more than Jacob could have ever provided for himself. That same grace is available for all of us today.

Good Sense Movement Team
Good Sense Movement
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