What to do with unexpected £100k

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We have very unexpectedly been given £100k. We have put aside 10k for a new car but other than that, we don’t really know what to do with it. We aren’t clued up on stocks/shares and saving accounts really. We have 3 kids and whilst we don’t struggle every month, I still feel stressed that we don’t have enough money. We aren’t desperate to use this money to help the day to day and spend it on bills etc but I wondered if anyone more financially savvy than us could suggest a good use of it? Thank you so much everyone.

Save some: Long term ISA, stocks and shares/premium bonds. Short term rainy day funds like days out/repairs or Christmas/birthdays.

Mortgage? or save up some rent to help give a breather

Holiday/days out

Home reno/decor

Pensions

put a little aside to start a kids account for their future.

Consult a financial adviser when you’ve decided about savings etc.

Do you have a mortgage? If it were me, I'd pay my remaining balance and be mortgage free. That'd free up lots of extra cash each mort so if then book a nice family holiday!

Thank you.

Yes we do have a mortgage and even if we used half of it to pay it off then it wouldn’t make a particularly big dent on it. Great idea about the kids’ savings. I will have a look at the ISAs too as I am pretty clueless about these things.

The people who gave us the money said they wanted us to use it to enjoy our life but I am definitely more cautious than DH and think it should be used more ‘ sensibly’ for want of a better expression!

When we have unexpected income we do the following: save/invest 80%, spend 20%.

So, in your place I’d be spending £20k (of which you’ve allocated £10k to a new car). That would leave another £10k for you.

Of the remaining £80k, I’d prioritise building an emergency fund if you don’t have one then the rest in investments (I invest in low cost index funds) as that’s a great way to build wealth over time.

Also, check out Ramit Sethi on YouTube — he’s got great advice deciding how to manage money in a really mindful way, and practical tips on investing.

Give it to me, I promise to take really good care of it. 😇

Do you mean even if you used £50k to pay off your mortgage you’d still have a large balance remaining? Even if that’s your instinct, it is worth contacting your mortgage provider and asking them to give you some calculations on the impact overpayments can make on reducing the ongoing monthly payment. If you then saved the difference you could be well on your way to a stronger ongoing savings future!

Junior and regular ISAs would also feel like a very healthy boost for your financial future. Maybe consider a stocks and shares ISA.

Definitively take a portion of it for a treat or event that best suits your family too - or you might end up resenting just having the money in accounts…

if it were me…
-£10k car (as you’ve already allocated)
-£10k fun money - nice holiday?
-£20k emergency fund (or 6 months expenses, whichever is less)
-£60k into mortgage

That would pay off my mortgage with some change left for a Chinese take away! So I’d clear the mortgage and free up £600 a month.

I’d buy a lovely new horse and a lorry - can guarantee that’d chew through £100k in about 4 years with vet bills.

But assuming you aren’t the type to spend insane money on equines, I’d invest it.

Save it. The first 100k is a bitch is a famous saying. After that you’re rolling as long as you leave it.

Have a play around on a compound interest calculator.

How much of you leave it in a 5% isa. How much if you contribute x a month. How much it will be in 5,10,20, 30, even 40 years.

This is a real chance for you to start generational wealth for your children, and you won’t even have to do high risk strategies. Just be sensible and contribute a little each month.

Pay off any debt
Check prices of cars, they've shot up, you might need to allocate more
Anything going to give up the ghost soon - white goods, boiler, roof?

For me it'd be the rest against the mortgage or isas or pension but nothing wrong with some fun money.

Buy a flat or house, rent it out

I would save 60k mentally ringfencing around 20k for each kid towards university or if they don't go to uni a house deposit. I think premium bonds are quite fun as your money is safe but you can reinvest the prizes or enjoy spending them for extra fun factor (yes your pot will depreciate in real terms if you spend the prizes)

20k each might not be enough to meet the expected parental contribution to uni but it's a very good start.

Then you have 10k for your car.

30k left in a holiday pot to have a nice holiday abroad for the next 4+ years to honour the fact that the person that gave it to you wanted you to enjoy it.

Nice problem to have. Enjoy it.

Honestly, I wouldn't be saving for the children or not in their name anyway. You need this money for yourself.

I’d open an ISA for each child. Then invest same for each of you. That’s approx £25k gone. £10k for your car. £10k for a nice holiday. Any home improvements? The rest save, though I’d also start to over pay the mortgage on a continual basis.

Over time, investing is likely to grow faster than your mortgage interest rate so worth bearing in mind.

You might also be limited about how much its worth overpaying your mortgage due to early repayment charges or if you're still on an old cheaper fix. If you took out a 5+ year fixed before about 2022, it would be stupid to overpay before that rate ends.

Pensions are a good use of money if you can leave the money alone until you are around 57 or more, depending on your age, due to the tax relief.

The financial flow chart sets out sensible prioritisation in a logical order and while car replacement could be a good use of money along with using some for 'enjoying life' (£10k for a big holiday?) you'd really regret blowing it all if in future you needed the money because you lost an income, wanted to move house, start a business etc, so unless your surprise benefactor is likely to be handing more money your way in those circumstances, I wouldn't take their wish for you to use the money for enjoyment too literally. If they say anything, say that you're enjoying the financial security they gave you.

https://ukpersonal.finance/flowchart/

Put 2/3 o it towards your mortgage. You say it won’t make a big dent but that’s not right. You will drastically reduce the number of years it will take you to pay it off.

Then use the rest for the car, a nice holiday and an emergency fund.

Pension. Obvs

Not enough details to advise. Could you share more I.e.,
Do you both work and have pensions?
What tax bracket are you in?
Do you have any savings?
How big is your mortgage?
What age are you & DH?

I agree with pp, invest 80% enjoy 20%. How you invest depends on current situation, age and long term goals.

This is very sensible. You were fine without the £100k so put it away in investments and pretend you don’t have it. Over a couple of years you can get it all into tax free ISAs, choose a dead easy fund like a vanguard life strategy one and continue to let it grow.

This is a chance that won’t come along every day to make a genuine difference to your family’s future. Frittering chunks here and there on cars and holidays would be very foolish in my view.