Receiving an inheritance, especially an unexpected one, might leave you feeling a little overwhelmed.
You may be dealing with the emotions of losing a loved one and now you are overwhelmed by the options an inheritance can bring. Ideally, the money should bring you closer to financial independence, but many don’t know how to handle a windfall.
There are two common mistakes people generally make. They blow the money on themselves to just buy stuff and the second mistake is that they choose bad investments. They may feel that the inheritance is ‘bonus’ money and therefore take on too much risk.
Our quick tips are:
- Develop your strategy – take the time and consider all your options. You should discuss this with your partner or someone that you believe has your best interests at heart and will be completely honest with you.
- Take an inventory of your current financial life:
- Determine if you have adequate insurance?
- Are you carrying too much high-interest debt?
- Are you on track for retirement?
- Do you have an emergency fund that will cover you for at least 6 – 12 months?
- Make sure that your foundations are in place:
- Use the inheritance by building a better life for you and your family.
- Gain financial stability in the areas that are pressing and then put the remainder towards reaching your goals. They could include:
- Paying off high-interest debt, such as credit cards and car loans;
- Paying off your mortgage;
- Making voluntary contributions to your super;
- Contributing to your children’s education;
- Funding your retirement;
- Investing in shares or property.
Inheritance can get complicated, as there may be taxation and other rules that apply.
You should buy yourself a luxury item or reward with some of the money. Just remember that the reward will be so much sweeter if you have a long-range financial plan first.
To get you thinking about your inheritance and your options, talk to us today for a confidential discussion.
This information is of a general nature only and has been provided without taking account of your objectives, financial situation or needs. Because of this, you should consider whether the information is appropriate in light of your particular objectives, financial situation and needs.