You hear the horror stories – someone inherits a large sum of money and spends it quickly and recklessly. If you recently inherited money, how can you prevent this from happening to you? Use these tips to handle your inheritance responsibly.
Do Not Rush
While you may feel the inheritance burning a hole in your pocket, take time before making any major financial decisions. Placing your inheritance in an interest-bearing savings account while you develop a long-term strategy is wiser than making impulsive money moves in the short-term.
Prioritize Your Financial Goals
Take some time to review your financial goals. Perhaps you have some outstanding credit card debt, are approaching retirement or want to invest in a friend’s company. An inheritance can be an excellent way to achieve these financial goals. Consult a financial advisor to help chart an effective path.
Speak with a Trusted Financial Advisor
After receiving an inheritance, you may find people come out of the woodwork, each with their own piece of advice or idea for how you should spend or invest your money. A financial advisor can help you outline long-term goals and craft a solid financial plan for your inheritance. Financial advisors can also help you navigate tax implications. A trusted financial advisor can provide insights to maximize your gains while minimizing taxes.
Allow Yourself a Little Fun
Once you meet with a financial advisor, you should have a clear financial plan for your inheritance. Then, it is ok to splurge a little – just make sure you include it in your financial plan. The budget you should leave for fun may vary, but consider reserving 10% of your inheritance or $10,000 – whichever is the smaller sum – for splurging. By allowing yourself a little bit of fun, you can enjoy your inheritance without letting the spending get out of control.
For assistance creating a financial plan, contact a Fifth Third Bank financial advisor today.