Inheritances are the epitome of bittersweet. On one hand, you are mourning the loss of a loved one, but at the same time you have received a sum of money that may just change your life.
It can be both daunting and confusing trying to figure out the best course of action for your newfound riches, partially because your mind is most likely focused elsewhere and partially because dealing with money is stressful in the first place.
So, our answer to you asking, “what should I do?” is: get help!
Who Can Help Me?
The best person to seek advice from on how to handle you or your family’s inheritance is a financial advisor.
Meeting with an advisor can ensure that you make the most of the money you have received, and do not end up having financial difficulties because of it.
Often times, individuals who come into large sums of money get excited and spend the money before thinking things through. For example, do not go and purchase a very expensive property or vehicle, and leave yourself no money to pay for the upkeep, insurance, taxes, etc.
What Are My Options?
- Save, Save, Save
While saving is not the most exciting thing to do, it is both smart and responsible. It is important that you consider saving at least a portion of the inheritance you are to receive.
This can be done by simply holding the money in a savings account, setting it aside for the future in some form of retirement savings, or even putting it into education savings plans for your children (if you have any).
- Pay Off Debts
Most of us have at least one type of debt that we owe: credit cards, student loans, vehicle loans, or mortgages, to name a few.
As we pay these loans back every month, we are also paying interest above and beyond the initial amount we borrowed.
Paying off debt in a large chunk will negate all of the accumulated interest you would have otherwise paid over the coming months and will give you back at least some of your financial freedom.
- Make A Large Purchase
Not everyone has debt, however, and even if you do it may not be a large enough some to be of a top priority.
Perhaps you do not yet own a vehicle or a home, and were previously not financially able to make such a purchase.
Using your inheritance for a down payment (or full payment) on a vehicle or a home can be a great way to retain equity, make an investment, and improve your quality of life.
- Treat Yourself
Of course, you should never feel bad about leaving a little room to treat yourself. Whether it is big or small (depending on the size of the inheritance), you should not feel guilty about spending some of the money on something for yourself.
Go on a shopping spree, have a spa day, book a vacation, or get the playoff tickets you’ve been wanting.
The most important thing to remember when you receive an inheritance is to act responsibly. Money may be exciting, but dealing with it can have consequences you may not understand.
Talk to someone, learn what your options are, and spend in a way that will enrich your life without causing problems.