When you come into some money

There are several situations where you might find yourself receiving a large sum of money - such as a deployment allowance or an inheritance.

If you're a single person you might not have many everyday living expenses while on deployment, which would allow your pay to build up, adding to the lump sum.

This is a great chance to pump up your Money Fitness, so in these situations it's important to make the most of this opportunity and use your money as effectively as possible by following a few simple rules.

Top five things to do with your lump sum

Pete, ex-RAF

I always followed one simple rule: When you earn a bonus, consider spending half of it and saving the other half, so that you get to enjoy your money but also put something aside.

  1. Your top priority should be to pay off expensive debts. It may be tempting to spend the money now, but by paying off debts you will save money in the long term. While high-interest loans and credit cards are the highest priority, you could also consider paying off some of your mortgage if you have one.
  2. If you don't have any debts, consider saving or investing some money. This could mean saving up for a major purchase such as a car or the deposit on a house, or building a fund for emergencies or saving for school fees or university if you have children. If you have a lot of money to invest, you might consider speaking to a professional financial adviser
  3. Another way in which you can use money now to provide for your future is by topping up your pension. For a military pension this is not always an option, you should seek advice from Veterans UK (formerly SPVA).
  4. If you're already in good financial shape, there's nothing wrong with spending some of the money on something you really want or need, like home improvements or a holiday, but see our tips on how to be a savvy spender.
  5. If you're feeling really generous and can afford to spare the money, you could use some of your lump sum to help out family or friends - for example, by paying off their debts.

Getting your priorities right when you get a lump sum will keep you MoneyFit!

 

Last reviewed: 29/05/2018