You’ve just inherited a large amount of money. Inheritances can create excellent opportunities for you depending on how much you received. For some people, the immediate thought is to spend that money right away. However, inheritances can have great financial impacts for you if you treat them carefully. Normally with an inheritance, it involves a loss within your family or close relationships – so strong emotions are at play here. Emotions can cloud our better judgement and therefore can affect how and where you spend your money. Here are some helpful tips on how to manage your inheritance (the right way).
Give yourself time
You need a second to breathe. An inheritance can be a lot to take in so don’t jump into anything right away. Once the initial shock has lifted and you’re in a steady mindset again, start to make a plan. By planning what to do with your inheritance instead of blowing it all at once on a crazy vacation or large non-necessities, you eliminate the risk of financial regret.
Consult with a financial planner
It’s extremely important to get the right advice from an expert. By meeting with a financial consultant, you can create a plan together by deciding which route is the best for you to take with your inheritance. Some of you may know exactly what you’re doing on your own, but a financial consultant can show you all the opportunities available that you may not understand or even know of and all the risks that are involved.
Save or invest your money
Your financial consultant knows how to make money talk – so let them help you decide on where to place your money. The smartest thing you can do is take the majority of what you’ve inherited and invest or save it. Think about any big financial goals you may have. Are you saving for a house? Are you looking to invest more into RRSPs or TFSAs or any other type of savings plan you may have? Make a list of your financial goals and see what takes priority.
Eliminate or reduce your debt
If you’re currently paying off any debt, this is a perfect opportunity to lower and finish paying off any large financial burdens. Any mortgage payments you’re currently making or school loans you’re still trying to get rid of – now is the time to lower your debt and give yourself a bit of financial relief.
After you’ve planned where and how you’re going to invest most of your inheritance, see what’s leftover for you to use now. It’s OK to treat yourself a little bit if you’d like, but as your mother always told you, don’t go spending all your money in one place. It’s recommended that if you want to keep some of your inheritance aside for leisure, make it around 5-10% of what you received, and invest and finance the rest appropriately.
An inheritance usually comes at a great loss so my condolences to you and your family. If you would like to find out more about how to use your inheritance right and how to use it towards any of your large financial goals such as purchasing your first home or putting towards your mortgage payments, I can help. You can contact me, Darren Robinson, at 705-315-0516 and let’s set up a meeting. I can guide you on where your inheritance money can and should be invested and how this will positively impact your future goals and financial plan.