By Babajide Komolafe

One of the odd realities of life is that people experience financial windfalls at one point or another in their lives. Maybe not everybody, but a lot of people will experience a financial windfall at least once in their lifetime. Sadly, many have not been able to use such windfalls to create wealth.

The first step to using a financial windfall to create wealth is to recognise it. A financial windfall is an unexpected and sometimes huge income.

Such windfalls come in various ways for different people. For a businessperson, it may come as a sudden boom in business. For example, you sell fried yam, plantain and associated food in a community. Your usual customers are residents of that community. However, due to the commencement of a major construction project, there is an influx of hundreds or thousands of workers who now patronise your business. As a result, your business experiences an unexpected and huge increase in demand, revenue and profits.

As an employee, you may be transferred to a department that requires a lot of travelling, with each trip coming with various allowances that are not part of your regular salary. If the allowances are more than the expenses for each trip, the excess is a windfall.

Your business may suddenly become the recipient of a major contract from a corporate or government organisation because a very close acquaintance is now in charge of awarding that contract. As a result, your revenue and profit soar to hundreds of millions of naira.

And of course, you may emerge the winner of a product promotion that comes with huge prize money, like the salary-for-life prize of the famed Diamond Bank savings promotions.

The first challenge with financial windfalls is that you don’t know when they will come or how long they will last. And because they are not part of your regular income, you were not expecting them and therefore have no plans for spending them. So, the tendency is to spend impulsively on things that catch your fancy. And because the tendency is to assume that the windfall will last for a long time, you may continue this impulsive spending habit.

However, when circumstances change in a way that negatively affects the source of the windfall, it stops, and you are caught napping. Unfortunately, you may not have the opportunity of another windfall again in your lifetime.

The second step is to understand the purpose of a financial windfall. It is an opportunity to create wealth and increase your regular income. Some people mistake a financial windfall for an opportunity to increase their current consumption and lifestyle. No, it is not.