Why we do it:
Research shows we’re likelier to spend modest windfalls – usually a few hundred dollars – than large payouts, according to Gary Belsky
. Why? Well, those smaller denominations are frequently seen as bonuses outside our normal budgets, especially when they come as a surprise (ex: “I didn’t expect to get a tax refund!”).
How to fix it: When it comes to any windfall, it’s okay to treat yourself within reason. Just make sure to sink the rest into a real investment. “Spend 10 percent of any windfall, and the rest of it has to go towards a long-term goal – paying down a debt, contributing to your emergency fund,” says Freedman. “It has to be something real, something forward-thinking.“