The First Thing To Do With An Inheritance
You were on the receiving end of some money. Now let's talk about how not to screw it up.
Inheriting money is a unique financial opportunity—one that can change your life if managed well. But we understand it can also feel like a rollercoaster of emotions, which makes it easy to make bad financial decisions (think: blowing through it in 5 years—very common!).
Whether you’re overwhelmed, excited, or somewhere in between, this article will help you approach your windfall with confidence, purpose, and clarity.
Hit the Pause Button (and the Ice Cream Tub)
Studies show that most people who inherit money blow through it within five years. Let’s make sure you’re not part of that statistic.
Don't rush into any major purchases or investments. Before you splurge or dive into big decisions, hit pause. Financial choices made in the heat of emotions often lead to regret. And be wary of anyone pushing you to act fast—whether it’s for an investment, a big purchase, or a “once-in-a-lifetime opportunity.” Chances are, they’re more interested in their wallet than yours.
That said, don’t let the money sit idle forever. The person who left it to you likely wanted to improve your life, so let’s honor their legacy by using it wisely.
Time to Talk to a Pro (But Not Just Any Pro)
The truth is that inheriting money can make you a target for salespeople and scam artists. That’s why it’s critical to find a fee-only fiduciary financial advisor. Unlike commission-based advisors, fiduciaries are legally obligated to put your best interests first. They work for you—not for a sales pitch.
Pro Tip: Choose an advisor with expertise in tax and estate planning. Inheritance taxes can get tricky, and having a pro to navigate the details can save you big headaches (and dollars) down the line.
Create a Plan for Your Windfall
Every inheritance is unique, but the goal is the same: turn this windfall into a foundation for your dreams. Here’s a roadmap to guide you:
Lay the Groundwork
Build an emergency fund: Set aside 3 months of living expenses for peace of mind. And here’s where to keep it.
Crush high-interest debt: Free yourself from credit card or loan payments weighing you down.
Think Big Picture
Supercharge your retirement: This is a chance to leap ahead on your future goals.
Plan for major life milestones: Saving for a house, starting a family, or launching a business? Allocate funds to make those dreams a reality.
Make Room for Joy
Treat yourself, intentionally: Whether it’s travel, a new experience, or a gift you’ve always wanted, give yourself permission to enjoy some of this money—guilt-free.
The Big Mistake
The big mistake? Most people start with #4 in the list above—treating themselves first. But you know what they say about the best intentions. Without a plan, that new car, big trip, or splashy purchase can easily snowball into impulsive spending.
Inheriting money isn’t just about what you can buy—it’s about what you can build—it’s a chance to transform your future. The person who left it to you believed in your potential, and now you have an opportunity to build the life you’ve always envisioned.
With a clear plan, you can honor their legacy, avoid costly mistakes, and set yourself up for success.
The Bottom Line
Inheriting money is about more than just numbers—it’s about honoring the legacy behind the gift and using it to shape your future. By pausing, planning, and making intentional decisions, you can balance living for today with building a secure tomorrow.
Key Takeaways
Don't Rush: Take your time to process your emotions and make informed decisions.
Seek Professional Advice: Consult with a fee-only fiduciary advisor to create a personalized financial plan.
Build a Strong Foundation: Prioritize emergency funds, debt payoff, and long-term savings.
Avoid Impulsive Spending: Resist the urge to make large purchases without careful consideration.
Invest Wisely: Explore investment opportunities that align with your financial goals.
The F. Word
Ready for some real talk on how to master your money? Pull up a chair and pour yourself a glass.
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