In preparation for our building work (which starts today, eek!) we have been doing some decluttering. For a family of four who I thought didn’t buy very much, we have a lot of stuff. Things that we haven’t looked at in years. Paper work that I don’t know why we’ve kept for so long. Lots of items that we definitely do not need.
But, there are some things in there that were perfectly fine in terms of condition. They were just items that we were not using, not needed by us, not useful to our household. So, we’ve been selling items on Facebook Marketplace (which has been so straightforward, post coming up about it!).
That inevitably means that we’ve had some extra money in our budget. Money that I haven’t actually budgeted for, as of yet. Which is great! Extra money, especially for items we no longer needed is good by me. It means that someone else is using it, so the item in question hasn’t just been thrown away, plus we have some extra money as well. A win-win situation all round.
So, what to do with that unexpected income?
Firstly, top up your emergency fund. It is so important to have some cash saved away that is readily available in case of emergencies. So if you have an unexpected bill, or something breaks and needs replacing, you can get it sorted without having to worry. I personally don’t think that we have enough in our emergency fund, but we could have access to other money fairly quickly if needs be.
Related post: Why An Emergency Fund Is Important
Secondly, use it to pay off debt. If you’ve got credit card debt, or loans you can make additional payments on, then use the unexpected income to make some extra payments. Get these things paid off, so that you can use your hard earned money in better ways. Even if you’ve got an extra £20 from selling something, then use this to pay off a debt. It all adds up 🙂
Thirdly, fill up your sinking funds. Use the money to fund your short term savings goals. Whether that’s holiday spending, car maintenance, birthday presents or garden overhaul, if you’ve got some short term savings goals on the go (and you should!) then you can use the money to add to one of these.
Related post: Do You Use Sinking Funds?
Alternatively, you could add it to your everyday spending budget. Perhaps split it between your budget categories. If you got £20 from selling something, perhaps add £10 to your grocery budget and £10 to your fun budget. That gives you a little extra in your everyday budgets, possibly for a little treat at the end of the week 🙂
Related post: My 10 Minute Budget Routine
Of course, this is all subjective to how much unexpected income you are getting. We have sold four things recently which has made us £72. And very easily too! I’ll be totally honest, this was just absorbed into our everyday spending and budget. Some of it went on petrol for the week, for example. If I had thought about it a bit more, I should have put a bit more into our holiday spending fund. But I didn’t.
So, if you get some unexpected income, then think carefully about where it goes! It is so easy for it to just disappear into the ether, as I’ve found out the past two weeks. And this is someone who tracks every penny. But, if you are selling and getting extra money from different sources, then it can make a big impact to your overall finances. We still have some more things on there that will hopefully sell soon!
Have you had any unexpected income recently? What did you decide to do with it?
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We often get checks for reimbursements for work. I put them (and any side income) in a separate bank account rather than our main account. I then use this account for (unexpected) expenses requiring checks before tapping our emergency fund. It’s kind of a secondary emergency fund. Mostly it gets used for children’s expenses like Orchestra fees.
Having unexpected income is definitely a nice problem to have! I can’t think of the last time that happened to us. Definitely agree with you though that top two things for any money would be emergency fund or paying off debt.
To be honest I think that we would just end up saving it. We have a pretty settled outgoings and anything material and unexpected comes from our emergency fund -but as we know that will have something like a broken washing machine or blocked pipes or whatever a couple of times a year we will need to top it up. So I reckon that’s where it would end up.
I buy Premium Bonds with any extra income I make from either selling stuff or any other source over my regular salary – I don’t want it to just get absorbed into my regular spending accounts
Unexpected income is great, we often spend this money on house renovation, vacation etc. But saving it is more wise and much better