Unexpected money is as simple as it sounds, it is money that you aren’t expecting to receive. Who doesn’t love unexpected money? I mean come on! It often comes in the form of work bonuses, tax rebates or even as gifts. However it pains me to see what people do with the money, they buy new TVs, they buy a new cell phone, they buy a wii etc.

These people were not relying on the money for survival or anything and yet they find a way to spend money they didn’t even need. It certainly gives you an idea of how the average american has a negatives saving rate. The money seems to burn a hole in their pocket!

So what should you to with this money? Save it, not so hard is it? Set it aside with the rest of your portfolio or use it create some passive income. If you invest it right away you won’t even have the opportunity to spend it. Do this every time you get some extra cash and you will be able to build quite a nest egg.

Although spending a bonus is fun, the real value comes from just receiving it.  The bonus acknowledges all the hard work you have done, and it may sound cliche ( well not maybe, it does) but that recognition likely has more value then the money itself. So if you can learn to just feed off the good feeling of being valued then you should be able to retire early!

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Filed under: Saving