It may seem like a problem you'd love to have: Getting a huge windfall and not knowing what to do with it. Frankly, it could be anything – a Diwali bonus, an inheritance, an insurance settlement, the sale of a home or business, or even winning a lottery. What you should not do is squander it all on a reckless spending spree. Here are a few ways you can handle that bonus wisely. 1) Start an emergency fund Use this money to start, or supplement, an emergency fund. In life, you should expect the unexpected – job loss, sudden medical expenses, unforeseen emergencies. Having a reserve for a rainy day is a very good idea. Without an emergency fund, you are more vulnerable to sudden life changes. Most financial planners recommend setting aside 4 - 6 months' worth of living expenses in an emergency fund . If you take the liberal view of living expenses when deciding how much to stash away, your emergency kitty likely will last a little longer. 2) Clear expensive debt