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.
Life often throws curveballs, and sometimes, those curveballs come in the form of an unexpected inheritance which presents a unique financial opportunity. Let’s explore how to make the most of this windfall, ensuring it serves your long-term goals.
Inheriting money can be a real emotional rollercoaster, and that can lead to some seriously bad financial decisions. (Think: blowing through it all in 5 years, yikes!)
This article is for you if:
You recently received an inheritance.
You're about to inherit money and want to be prepared.
You're worried about making smart choices with your newfound wealth.
Now, let's get you on the right track to using your inheritance wisely and honoring the person who left it to you.
Hit the Pause Button (and the Ice Cream Tub)
We get it, inheriting money is a big deal. But before you go on a spending spree, take a deep breath. Financial decisions made with emotions can be disastrous. Studies show most people who inherit money blow through it within five years! Let's not become a statistic, okay?
Don't rush into any major purchases or investments. And be wary of anyone pushing you to do so. Chances are, they're looking to take advantage of you during a vulnerable time.
That said, don't let the money sit idle either. The person who left it to you wanted to improve your life, so let's make that happen!
Time to Talk to a Pro (But Not Just Any Pro)
Here's the key: Find a fee-only fiduciary financial advisor. This means they're legally obligated to put YOUR interests first. Inheriting money can make you a target for salespeople and scam artists. A fiduciary advisor charges a flat fee, not commissions on products they sell you.
Bonus Tip
Make sure your advisor has expertise in tax and estate planning. Taxes on inheritances can get tricky, so having a pro on your side is crucial.
Craft a Plan for Your Windfall
Everyone's situation is unique, so working with a financial advisor is key. But here's a general roadmap:
Build a solid foundation: Set aside an emergency fund and pay off high-interest debt.
Plan for the future: Think about retirement and college savings (if you have kids).
Think about mid-term goals: Now you can consider buying a house, starting a business, starting a family, or giving back to charity.
The Bottom Line
Inheriting money can be a good thing, but it’s important to approach it with a clear plan. Balance intentionally treating yourself today with using that money to help with your bigger goals. Avoid impulsive decisions, seek professional advice, and prioritize long-term financial goals.
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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