I've come into some money — what do I do with it?
Inheritance, bonus, redundancy payout, or something else. You've got a lump sum and you don't want to waste it. Here's how to think about it.
First things first: don't do anything yet. Seriously. The single biggest mistake people make with a windfall is rushing into a decision — whether that's spending it, investing it, or just leaving it in a current account while they figure things out (spoiler: they never do).
Whatever you've received — inheritance, work bonus, redundancy payout, gift, crypto cashout — the approach is the same. Park it somewhere safe for a couple of weeks, then follow a simple order of priorities.
The priority order
This isn't about being clever. It's about being methodical. Work through this list from top to bottom and stop when the money runs out:
Credit cards, overdrafts, store cards, payday loans — anything charging more than about 5% interest. This is the highest guaranteed return you can get. A credit card at 20% APR costs you more than any investment will earn.
3 months of essential costs in an easy-access savings account. If you haven't got this, nothing else matters — one car repair or boiler breakdown and you're back in debt.
If your employer will match more than you're currently contributing, increase it. It's a 100% return on day one. No investment beats that.
Cash ISA for money you might need in 1–3 years. LISA if you're buying a first home (25% bonus). Stocks & Shares ISA for anything you won't touch for 5+ years. All tax-free.
Overpay your mortgage, invest outside an ISA, top up your pension beyond employer match, or — honestly — spend some on yourself. You earned it.
How this works in practice
If Sam received £10,000
That's £10,000 fully allocated in maybe 30 minutes of work. Emergency fund sorted, house deposit boosted with free government money, and the rest growing tax-free. None of it sitting in a current account earning nothing.
What about tax?
Depends on where the money came from. Quick version:
Inheritance: No income tax to pay. Inheritance tax was dealt with by the estate before you received it. The money is yours, clean.
Work bonus: Already taxed through PAYE — what hits your account is yours to keep. Though a big bonus might push you into a higher tax band for that month.
Redundancy: First £30,000 is tax-free. Anything above that gets taxed as income. Your P45 will show the details.
Savings interest: Basic-rate taxpayers get £1,000/year tax-free (Personal Savings Allowance). Higher-rate gets £500. Inside an ISA, all interest is tax-free — no limit.
The “treat yourself” question
Should you spend some of it? Yes. Probably. If you get £10k and put £9,500 to work and spend £500 on something that makes you happy — that's not irresponsible, that's human. The guilt-free way to do it: decide the amount before you spend it. Set it aside. Enjoy it. Then don't touch the rest.
The trap isn't spending a bit — it's not having a plan for the rest. That's how £10k becomes £6k becomes “where did it go?”
A third of people who receive a windfall have spent most of it within two years with nothing to show for it. The difference between them and everyone else? The ones who kept it had a plan before they spent a penny.
Want this built around your actual numbers?
Theo plugs into your bank (read-only, via TrueLayer) and turns this guide into a plan with your actual ISA allowance, pension, and income. Launching Summer 2026.
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