A few days ago, life changed for 24-year-old Manuel Franco of West Allis, Wisconsin. The winner of a recent Powerball lottery, Franco took home $326 million after taxes. With this large a sum, it shouldn’t be hard for Franco to make his winnings last a lifetime. But that’s an extreme case. More often than not, windfalls of this sort deliver more heartache than happiness.

Consider, for example, Lara and Roger Griffiths, an English couple who in 2005 won the equivalent of $3.2 million in their local lottery. After celebrating with a spray of champagne, Lara and Roger both quit their jobs to go on a buying spree: three houses, sports cars, jewelry and an upgraded lifestyle that included vacations in Dubai, Monaco and Majorca. As a result, sadly, the Griffiths found themselves penniless just six years later.

To be sure, the Griffiths’ story is also extreme. But if you are the recipient of a windfall—whether from a bonus, stock options, the sale of a home, an inheritance or even just a tax refund—it’s important to employ a logical framework when allocating these new funds. Below is the ten-step process I recommend:

Step 1: Set aside for taxes. The single most important thing—and the very first step you should take—is to visit your accountant. Even if the check you receive withholds some amount for taxes, that often is just an estimate. Only your accountant knows your entire picture well enough to make an accurate estimate. Then take that amount and stow it in a separate FDIC-insured savings account.

Step 2: Diversify. If your windfall came in the form of company stock, it may be tempting to hold onto it. After all, you know the company, and you may incur further taxes to sell your shares. But I would encourage you to think about it this way: If you didn’t already own the stock and didn’t work for the company, how much of this one company’s stock would you buy? I wouldn’t let any one stock account for more than 5% or 10% of your net worth.

Step 3: Eliminate high-interest debt. If you’re carrying credit card debt, I would eliminate it. With the average credit card charging nearly 18%, you’ll earn the equivalent of a guaranteed 18% tax-free when you pay off your debt.

Step 4: Evaluate lower-interest rate debt. While I wouldn’t hesitate to pay off high-rate debt, you don’t need to eliminate all debt. If you have a very low-rate mortgage or car loan, for example, it might make sense to keep that loan, even if you could afford to pay it off—for two reasons: First, you might be able to earn more, over the long term, by investing those funds. Second, and maybe more importantly, it buys you flexibility. You can always pay down debt later, but it’ll be much harder to take out a new loan if you’re short on cash some day down the road. (Banks, as they say, prefer to lend money to people who don’t need it.)

Step 5: Set aside for charity. The next step is to think about charitable contributions. Especially if your windfall will push you into a higher tax bracket, charitable gifts are a very effective way to moderate your tax bill in a high-income year. As I have recommended in the past, a donor-advised fund is an easy, flexible and effective tool to support charitable causes while cutting your tax bill.

Step 6: Consider gifts to family. Depending upon the size of your windfall, you might consider gifts to family members. This will depend on a number of factors, but if you do make these kinds of gifts, do so very carefully. Think about equity among your recipients, and also be sure to set expectations. Is this a one-time gift or the start of regular, annual gifts? Whatever your plan, everyone will be happier if you communicate it up front.

Step 7: Do something meaningful. Economists caution people against “mental accounting”—that is, treating money differently depending upon its source. To a purely rational mind, money should be fungible. But most people aren’t purely rational—and that’s okay. I think it’s completely reasonable to use part of a windfall to purchase, or do, something that carries sentimental value. You could, for example, use part of an inheritance to purchase something special for your home, something that will serve as an ongoing reminder of the person who left it to you.

Step 8: Do something frivolous. As important as it is to do something meaningful, I also advise doing something frivolous. Why? Because it is largely unavoidable. It’s the rare person who won’t be tempted to do something fun. Recognizing that reality, I think it’s better to budget for this, rather than letting it just happen. That’s what got the Griffiths in trouble: If it had been just the McMansion or just the sports car or just the jewelry, they probably would have been fine. So have fun, but within a prescribed limit.

Step 9: Save the rest—slowly and with an eye toward tax-efficiency. After making each of the above allotments, you’ll want to save the rest, but don’t rush to invest it. Give it time. Especially with stocks (as well as bonds and real estate) again near all-time highs, I don’t see any particular urgency to jump into the market. Instead, give things time to settle down. Be sure all of the above allotments are taken care of, and take plenty of time to think through your long-term plan. Also, because your tax rate may be quite a bit higher in the year you receive a windfall, you’ll want to implement as many strategies as you can to cut your tax bill.

Step 10: Keep a low profile. If you saw Lara and Roger Griffiths on the day they won the lottery, they were anything but discreet. Nothing good comes from drawing attention to yourself, and it only makes it harder to follow these steps carefully, methodically and on your own terms.