Last Updated on Dec 18, 2019 by James W
It’s not something that happens to everyone, but there are a number of people who are all set to benefit from a windfall sometime in the future. If you’re wondering what you might do if you found yourself with an inheritance, this article will help you decide. The temptation is to enjoy spending it. Perhaps by taking a long overdue vacation or buying a new car. However, there are far better ways you can spend a life-changing amount of money. Before you decide to do anything, sit back, take a deep breath and read the following advice.
Payoff Your Debts
Freedom from debt has far-reaching consequences, both for your financial and emotional well-being. As well as being free from the burden you will also be saving far more in interest than you could expect to earn from investing the same amount. The highest interest debts should be the first you pay off, followed by car and bank loans and your mortgage. Once the debt is removed you’ll be surprised at how different it makes you feel. Eliminating such a weight from your mind will make a big difference to your relationships and your own self-esteem.
Have an Emergency Fund
It’s important to have a financial buffer for unexpected events life tends to throw at us. It should be an amount of money that’s enough to keep you and your family afloat in times of need. Three to six months living expenses is the recommended amount and it can be a challenge to put this amount aside. Receiving an inheritance will help you create this all-important buffer. You’ll be able to tap into it should you lose your job, fall ill or suffer a loss of income for some other reason.
Have You Got a Retirement Plan?
Have you thought about how you’re going to maintain your lifestyle when you retire? Receiving a windfall could be just the break you’re looking for if you haven’t yet made any plans. The best advice can be given by a financial advisor. A company such as Tax Return will also be able to advise you on where you stand with regards paying tax.
Choose Your Advisors Carefully
As soon as word gets out that you’ve been left a sizeable amount of money there will be no end of advisors crawling out of the woodwork to offer their advice. Everyone you meet will be happy to tell you what you should do with your cash, and many of them will also be holding out their hand. It’s not unusual for inheritors to be unsure about what to do with their new funds and there are many common mistakes to avoid. Ideally, you should look for a financial planner, a tax planner and an attorney who can help with any probate issues. Start with a finding a good financial advisor and they’ll be able to help you find all the other necessary experts to have on your side.
Managing an inheritance is not the easiest of tasks, but there is plenty of reliable and trustworthy advice available. It’s important you make the most of the money a loved one has left you and use it to create a better life for yourself.