“It is by love that God has always led me, by love that God reproves me, by love that God lets me see love in all” (St. Mary MacKillop).

Often, I meet with people who received an unexpected influx of money. Not knowing what to do with it, they spent it all or put it in a savings account with a small interest return. Other uses for this money include paying down debt, starting to invest, saving for retirement or college, donating it … The options can feel overwhelming. How do you decide on the best choice?

Truthfully, it is different for every individual. Figuring out which option makes the most sense requires a deep dive into your personal finances, money mindset, and practical financial knowledge. This article attempts to lay out this thought process.

Where to Start

Unless the decision is clear, and whatever you’re planning is likely to take place within a month or two, it is a good idea to start by placing the money in a high-yield savings account or money market mutual fund. Right now, many of them are earning a 3%- to 5%-annual return. While you analyze the long-term plan for this money, allow it to work for you in one of these funds or accounts.

Do your homework when you pick one. Check their minimum balance requirements, their fees, and how long the fund or account has been around. Some of the benefits of these accounts are the ability to access the money at any point, little to no risk of losing it, and a decent return: In one of these funds or accounts, $10,000 will earn $25 to $40 in just a month.

Consider Your Debt

Now that you have the money safe and working for you, take the time to do a deep dive into your personal financial situation, starting with your debt. Ask yourself the following questions:

• What outstanding loans do I/we have?

• What is the interest rate on them?

• How long will it be until they are paid off?

• How much stress is associated with this debt?

The first three questions are practical, and you should be able to find the answer in recent statements. The last question may take some reflection time. Take that time, and talk to God about it. To help make it more tangible, try to label each loan with a stress level from 1 (not stressed at all) to 10 (I cannot sleep at night because of this debt). Also take into consideration how it may be affecting your credit and future goals.

Note that when you pay off debt, you are making a guaranteed return on your investment: the interest rate. For example, if you pay off a credit card balance of $10,000 that has an interest rate of 30%, you just made a 30% return by avoiding those high interest rate charges (about $250 per month, in this example). Consider prioritizing paying off any debt with an interest rate over 7% (depending on your personal financial situation).

Other Considerations

Let’s take a look at a few more things before making any decisions.

Creating a Cushion

Are you adequately providing for yourself and the people you are responsible for? The answer to this question is subjective, but would your joy, spiritual development, health, etc. benefit from an extra cushion each month? Would you be less stressed if you had a bit more of a buffer? We could all convince ourselves to answer “yes” to this question; be honest, and consider asking people you trust to give their opinion, too.

Remember, your “windfall” is a finite amount of money that will slowly diminish. Let’s go back to our example of $10,000. If that amount is in your high-yield savings account, it is earning $25 to $40 per month. If you only spend what it earns, you will always have that $10,000. However, as soon as you begin spending more than the earnings, you will shorten the lifespan of the amount quickly. Both the amount you began with (your principal) and how much it is earning will decrease. The interest, or earnings, are based on what is in the account. In the same way, if you do not spend all of the earnings, they will grow, due to compounding. If you need the cushion, take it—but talk to a professional about how to take it the right way and how long it will last.

Types of Accounts

What about different savings options? How do you decide between investing in a taxable account, investing in a retirement account, saving for college, buying a CD, buying a bond, and all the other choices out there? Again, look at where you are, what your goals are, and the rules the government has regarding these options.

Investing in a taxable account gives you the most flexibility. You can access the money at any time and use it for whatever you want. In some ways, this flexibility allows you the most options—but it does come with risk. If you do not want to educate yourself on those risks, find someone you trust to answer your questions or do it for you. Financial advisers and planners specialize in working for you and giving you advice specific to your situation, goals, and risk.

Individual retirement plans (IRAs or ROTH IRAs) provide great tax incentives if you know you want to wait to access the money until retirement. However, there are income level exclusions, penalties for early withdrawals, and other rules to be aware of. IRAs are investment accounts, so be sure to buy securities (e.g., stocks, ETFs, mutual funds, etc) within them. Otherwise, you won’t be accessing their benefits, and they’ll become essentially a savings account with lots of rules.

Certificates of deposit (CDs), bonds, and even high-yield savings accounts can provide little- to no-risk growth (depending on the type). They are great options in certain situations or if you are risk-averse. They come with their own set of rules and restrictions. Again, educate yourself if you think they might be right for you.

Tithing

What about giving? Should you tithe on a windfall? This question is more of a spiritual question than a financial one, so my answer is to pray about it. God puts urges on our hearts that we should listen to. I believe giving is essential to living life fully alive, but it takes multiple forms. I encourage you to read my articles about budgeting with God and whether it is OK to build wealth as a Catholic. As you dig into these topics, keep in mind your windfall and what God may be asking you to use it for.

It’s no wonder we often feel overwhelmed or frozen when we come into unexpected money. There are so many options (even more than I’ve listed in this article!). Upon considering the questions asked in this article, what seems the most urgent? Which choice seems the most prudent? Consider using more than one option. Most of all, pray about it; ask God what He is inviting you to use the money for.

With some prayer, planning, and analysis, you can find the right answer for you. When in doubt, consider reaching out to a professional just to be sure you understand everything and are making the best decision. They might come up with a plan that includes more than one of these options—or something different altogether.

Remember gratitude, generosity, and the importance of providing for yourself. God loves you. He has given this money to you. Include Him as you decide your next steps, and continue to walk with him as you manage your finances.

Erica Mathews is a CERTIFIED FINANCIAL PLANNER™ with Financial Counseling Associates, a small, family-owned, independent financial planning and investment management firm. She is passionate about helping families and individuals build their wealth so they can live out the calls God has placed on their hearts. As a wife, mom of four, and businesswoman, Erica understands the complexities of family life and helps relieve the burden of financial stress with organization, a plan, and automation so her clients hit their goals. Erica lives in Colorado with her husband and four kids. They love everything outdoors, including gardening, hiking, biking, and simply exploring nature. If you would like to reach out to Erica, her email is erica@fca-inc.com.