Smart Ways To Use a $100,000 Windfall

The odds of winning the Powerball jackpot by matching all numbers drawn are 1 in 292,201,338, according to the lottery. But people win all the time. While they're not raking in millions, hundreds of people win between 10 and 100-thousand dollars every year.

What would you do if you won the lottery or received a large inheritance? It’s time to figure out what you will do with all that money.

Regardless of the circumstance, there are several smart ways to spend a large sum of money. If you have, or are dreaming of having, a $100,000 windfall, you should spend the money responsibly.

Before you go on a shopping spree and buy a private island or escape to the Caribbean, you might want to take a deep breath and consider ways to use your newfound wealth wisely by managing your money to turn it into a long-lasting financial legacy. Here are seven ways to use a $100,000 (or smaller) windfall.

1: Pay Off High-Interest Debts

High-interest debt, such as credit card debt or personal loans, will burden your cash flow and destroy your financial health. By paying off this debt, you can free up money each month and reduce the amount of interest you pay over time.

There are two primary ways to pay off your debts using your windfall:

Snowball Method: This Dave Ramsey-preferred method involves paying off the debt with the smallest balance first, then using the extra funds from that debt to pay off the next smallest balance, and so on. This method makes quick progress and keeps your motivation high.

Avalanche Method: This debt repayment strategy involves paying off the debt with the highest interest rate first, regardless of balance. This method helps you pay off your debt faster and save more money in the long run by minimizing the amount of interest you pay over time.

Or, consider eliminating all your debts at once if your windfall will cover them.

2: Invest in The Stock Market

The stock market has been proven to make a lot of people rich over time.

Consider opening a Vanguard brokerage account and investing a good portion of your windfall in the market.

Remember, investing in the stock market comes with risks, and it is important to understand that past performance does not guarantee future results. Consider working with a financial advisor to help choose the right investments for your goals and risk tolerance.

3: Start (Or Pad) Your Emergency Fund

An emergency fund is money you set aside to cover unexpected expenses such as a sudden job loss, car or home repairs, or medical bills.

Having an emergency fund can give you peace of mind and help you avoid going into debt in the event of an unexpected expense. Aim to have at least three to six months of living expenses saved in your emergency fund, and separate your emergency fund into a separate savings account to make it tougher to spend accidentally.

Bankrate found that more than half of Americans can not cover three months of living expenses without a job. Don’t be one of these people.

4: Buy Real Estate

Real estate can be a great way to build wealth over time, but it’s not the same as investing in the stock market. Instead of owning a portion of different companies, real estate investing gives you ownership of physical parcels of land and structures.

Here are three great ways to start investing in real estate:

Renting out a house: This involves purchasing a property and becoming a landlord. Investors can generate income from rental properties and also benefit from the appreciation of the property value over time.

Real estate investment trusts (REITs): REITs are publicly traded companies that own, operate, or finance real estate properties. Investors can buy shares in a REIT and get a share of the income generated by the properties.

Real estate crowdfunding: This relatively new investment option lets investors pool their money to purchase a property. Crowdfunding platforms provide a way for investors to access real estate investment opportunities without purchasing an entire property.

5: Invest in Yourself

Investing in yourself is one of the best investments you can make. The wisest investments are those that make us smarter, help us build new skills, or just be happier in life.

A few examples of investing in yourself include:

Learn a New Skill: Invest in learning new skills, taking courses, and attending workshops or seminars to improve your knowledge and capabilities. This can help you advance your career, increase your earning potential and improve your personal development.

Personal Development: Invest in therapy, mentorships, or coaching to work on personal growth and overcome obstacles that may be holding you back.

Health and Wellness: Invest in taking care of your physical and mental health, including exercise, healthy eating, and stress management strategies.

Expand your Network: Invest in building relationships and connecting with others in your industry or community. For instance, have lunch with someone you haven’t spoken to in a while. This can help you expand your network and create opportunities for growth and advancement.

Invest in Retirement: Investing money for retirement is crucial to achieving financial security in your later years. By putting your money into retirement accounts such as 401(k)s or IRAs, you can take advantage of compound interest to grow your wealth over time.

6: Give Back to Your Community

You don’t have to use your windfall for yourself. Consider using some of your windfall to give back to your community to positively impact others and bring a sense of fulfillment. Consider donating to a charity or non-profit organization, volunteering your time, or helping someone in need.

7: Have a Little Fun With It!

Finally, it’s okay to enjoy some of your windfall.

Treat yourself to something you've wanted, such as a massage, new clothing items, a vacation, or a big-ticket item. The key here is to prevent yourself from spending all the money. Take a few thousand and have some fun, but use the rest to improve your future self!

This article was produced and syndicated by Wealth of Geeks.

Steve Adcock is an early retiree who writes about mental toughness, financial independence and how to get the most out of your life and career. As a regular contributor to The Ladders, CBS MarketWatch and CNBC, Adcock maintains a rare and exclusive voice as a career expert, consistently offering actionable counseling to thousands of readers who want to level-up their lives, careers, and freedom. Adcock's main areas of coverage include money, personal finance, lifestyle, and digital nomad advice. Steve lives in a 100% off-grid solar home in the middle of the Arizona desert and writes on his own website at