Receiving an inheritance is something many of us are not properly prepared for. It usually comes after a sad, and sometimes sudden event, the death of a relative. Most people rarely have the opportunity to spend or invest a large amount of money at one time, so an inheritance can be exciting and a bit confusing.
Number one piece of advice, slow down and take your time deciding what to do with the inheritance. Take months or even a year before making a final decision, especially if it’s a rather large sum and tied to an emotional event, like the death of a close family member. Consider the following ways to save your money until you make a decision:
- short-term CDs
- high-quality municipal bonds
- savings account
Understand Your Situation
It’s important to understand your current financial situation before deciding what to do with the money. If you haven’t had to do so before, develop a budget and financial plan. Use apps, online tools or the help of a financial advisor to take an honest look at where you are and where your inheritance could help you be. Consider some of these options to make your current situation better.
- Use part of the money for an emergency fund
- Pay down mortgage
- Pay down credit cards
- Pay down student loans
Look at the Options
Once you get information on your current financial situation, you can start to look at the best options. Many people tend to treat an inheritance as lottery winnings and go through it quickly. There’s nothing wrong with taking trips and enjoying the money, but there are a few responsibilities to consider:
- Pay down debt
- Down payment on a home
- Invest the money
- Prepare for retirement
- Set aside for children’s college
If you do inherit a large bit of money, the team at Broussard Poché, LLP suggests you speak with a professional. You have many options open to you, but guidance may be required. Don’t be afraid to ask questions, your financial future is on the line.