A windfall can be “something that the wind has blown down, especially a piece of ripe fruit blown off a tree.” Here, a windfall refers to something that is received unexpectedly, like a sum of money. But if that windfall is unforeseen or unanticipated, it may feel like a windstorm, so even happily surprised recipients can be caught unprepared–or uneducated.
Birthday presents, bonus for work done, an inheritance, money back from the IRS, or even a rebate… These windfalls present appropriate situations that can reinforce the goals of independence and options, as well as opportunities to be taken seriously.
The key to outwitting windfalls is to make a plan before the windfall happens. After all, the main purpose of most allowance programs is to teach your kids the habit of knowing what they have before they spend it and making sound choices. So, play the game of “what would you do if…” to strategize about windfalls. What would you do if you were given $100? $1,000? $5,000? $1,000,000? (Car rides are the perfect place for this game!) Play it often enough that you and your children get comfortable with the conversation. Have fun with it and listen to your kids’ answers, and how they change–or don’t change–over time.
“What would you do if…” is a great exercise for reinforcing and then putting into action the rule of three: save, spend and invest. For example: If your teen believes that he or she cannot survive without an iPhone, work out a windfall plan. If he/she gets $100, will the entire gift be put toward the iPhone–and you’ll loan him/her the rest? Suppose the windfall is $1,000. This windfall plan may be: He/she buys the iPhone, a share of Apple stock, and then donates $200 to a local “technology in schools” program.
Windfall and “allowance management” tools are especially effective in helping your kids manage for the future, with both trust funds and estate inheritance as well as family gifts. And this is the time of year when expected–or surprise–windfalls may blow down their way, but it’s also a time when they can learn about spending and saving as well as giving. Instead of waiting and being caught unprepared–or uneducated–use your examples, car games, and experiential modeling to help your kids make responsible decisions. So, have fun with them today…while preparing them for tomorrow.