I Came Into Unexpected Money—Should I Invest It or Upgrade My Life?

Personal Finance

Published: April 24, 2025 7:53 am

It’s the big question that anyone hit by a sudden financial windfall is bound to ask themselves: Should I spend and enjoy in the present? Or save it and invest in my future? And, as always, there’s really no one-size-fits-all answer to such a question. Ultimately, it depends on the size of the windfall and one’s current financial footing.

Someone on wobbly financial footing should seek to invest in bettering their standing, either by paying off high-interest debt, investing in stocks, saving for that emergency fund, or, perhaps, the best move of all, investing in oneself. On the flip side, for a financial overachiever who’s already in the retirement fast lane, I have no issue with spending a windfall to upgrade one’s life.

In any case, finding a middle ground would probably be the best move for most. There’s more than one way to have your cake and eat it, too. Either way, this piece will check in on a specific case involving a Reddit user who’s recently ran into a modest $6,400 windfall.

Invest and spend the $6,400 windfall? That’s the big question for this lucky Reddit user.

This lucky Reddit user took to r/FinancialPlanning for tips on what the financially literate community would do with such a sum. As you’d expect, some commenters strongly encouraged investing the windfall, preferably in a low-cost ETF (Exchange-Traded Fund) that mirrors the S&P 500 or Nasdaq 100, while others were more inclined to “treat” themselves with experiences that wouldn’t have otherwise been possible. Indeed, you could unlock some pretty unforgettable travel experiences with north of $6,000.

There’s really no right answer here. But for the Reddit user who’s debt-free, with a solid emergency fund (six months of expenses covered), and is on track with their retirement contributions, I’d argue there’s flexibility to spend the sum without having to feel any guilt.

Of course, even if one’s on the right track, topping up the retirement fund with another $6,400 could really add a nice jolt, especially for someone who’s young and can benefit from the power that comes with multiple decades of compounding. Their luxury of a long-term investment horizon will also allow them to ride out the Trump tariff correction and any larger waves that could come as things were to take a nastier turn for the summer.

While I’d be slightly in favor of investing the sum, likely in the Vanguard S&P 500 ETF (NYSEARCA:VOO) over spending the entire windfall on a few trips or a used vehicle, I’d argue that upgrades in the present moment can also pay big dividends. If enjoying the windfall means having the opportunity to “recharge” one’s batteries, and one won’t be put in a precarious financial spot at some point down the road, “upgrading one’s lifestyle” or treating oneself as a one-off may very well offer the better “return.”

Arguably, our Reddit user has “earned” the right to spend the windfall for staying out of debt and staying on top of retirement contributions, at least in my view.

In the meantime, stash the windfall in a HYSA.

As one weighs the pros and cons of investing versus spending, the windfall can go ahead and start earning some interest. With high-yield savings accounts (HYSA) offering close to 4% in interest, one can take their time as they plan on what they could do with the money. Arguably, spending half and investing the rest could allow one to get the best of both worlds.

That way, one won’t have regrets after they’ve returned from a trip ($3,200 is more than enough to afford a pretty decent vacation) or shock that they’ve spent the entirety of the amount in such a hurry. As always, the right balance between spending and saving will differ for everyone. For our Reddit user, though, who’s on steady financial footing, there’s flexibility to do whatever they’d like. Whether they opt to spend half, all of it, or most of it, the key is moving down the path that leads to the least regrets.