Monday, 25 June 2012

What Would You Do With a £1000 Windfall?

Say you won £1000 in a contest. What would you do with the money? It's not an absolutely huge life-changing sum, but it's a still a nice windfall of extra money to fall into your bank account.

So what would you do with the unassigned money?

I had to make this decision recently. I knew I was in for a tax refund because I'd been on the wrong tax code for six months of the past year! I was very pleasantly surprised to see that I was due a refund of just over £1000!

Now, the thing about my tax refund is that it isn't “free money”, although it is VERY easy to think of it as an excuse to spend! It's money that I had to give up valuable hours of my life to attain. Then again, even if I won £1000 it would be hard to forget that it is worth nearly 165 hours of my life (at minimum wage). Ouch, that is painful to write! I think my time should be worth a lot more than that

Here's what I did with my hard-earned yet unassigned money:
  • Bristol fund - £410. I completed my Moving-to-Bristol fund. This was the main thing I was saving for, so it was important to me to sort it out long before I might need it at the end of the summer!
  • Travel fund - £60. I save a little money every month for future travel and I thought it would be great to use some tax refund for something that I will really enjoy. I love seeing the rest of the world! :)
  • Gift fund - £50. May and June are particularly expensive months for birthdays in my world, so it was good to re-build my depleted gift fund!
  • Family meal - £30. My family rarely go out to eat because it can be quite expensive. I treated us all to breakfast on my sister's birthday with a little of the cash.
  • Emergency fund - £200. After meeting my main savings goal (Bristol fund) I have started bulking up my emergency fund because you never know when you'll need some cash.
  • Concert ticket - £24. If I am going to spend money, I would rather buy an experience than an object. When I heard one of my favourite bands was coming to Cornwall and putting on a concert on a local beach, I had to go!
  • Bike repairs - £26. I had a blow-out the other day. I don't know what I ran over but the puncture ripped straight through the tyre and into the inner tube, leaving a big tear in both of them. I bought a new tyre and upgraded my inner-tube to a puncture-proof variety. So far so good!
  • Current account buffer - £200. I tend to transfer any “spare” money into my ISA, so occasionally my current account goes into my interest-free overdraft. This doesn't cost me anything so isn't really a problem, but since I got out of debt I really don't like seeing the number go below £0. I put a £200 buffer in this account and think of it as £0, so now I should never actually go into the red.

What would you do with a windfall? Save it all or blow it on a holiday or the latest iGadget? :) Did you get a tax refund? Click here to find out if you are entitled to a refund and how to get it!

P.S. That 58 minutes on hold to HMRC was the best-paid hour I've ever spent!


Lili@creativesavv said...

I'm like you, I wouldn't see a tax refund the same way as contest winnings. The tax refund was mine all along, and was hard-earned. But winnings feel different in my mind. If it was a tax refund, I'd likely use it as a surplus in the monthly budget, to be carried from one month to the next, in case we need/want to dip into it.
If it were winnings, I'd travel, no thought required on that one!

cumbrian said...

Have a holiday, as you say, buy experiences not things.

Frugal Living UK said...

I like the way you split it down, good sense. I think mine would go towards the house fund, things that still need doing!

Alex said...

I'd be tempted to blow it on a nice break if I could get the time off work. :-)

I'm not sure I could be as disciplined as you and split it between all these different "funds"!

kelley said...

I'd spend part of it on things I need like new shoes, socks and scrubs for work...half would go to student loan and the rest in the bank emergency fund...

SpanktheMagicMonkey said...

I think I would see it as unexpected savings and therefore considering I survived just fine without it, would probably blow it all on a holiday. I work hard for the money I earn including working out of ours so I don’t see why I should take well deserved rest every once in a while.

Life is for living, not for working.

Anonymous said...

It's amazing the amount of people who don't claim their tax back out of laziness. So fair play to you for getting back what's rightfully yours! By the way, I really enjoy reading your blog and have nominated you for the "One Lovely Blog Award" ;-)

Anonymous said...

Hi The Frugal Graduate
I have been following your blog for a while now but haven't left any comment as I have been a bit shy:)You provide really useful information and create inspiring posts. I have nominated your blog for One Lovely Blog Award. All the best.

saving for travel said...

I think you have distributed the money brilliantly-nice lot of savings, a few treats and some for travel. Yeah!

What would I do?

Well probably £500 towards Japan

£200 for treats

£100 for clothes

£100 for gifts

£100 in contingency.

It's nice dreaming about it!

Sft x