Imagine this - you suddenly come into one million dollars of inheritance 👀
Did your heart skip a beat? Are you immediately imagining purchasing a yacht or taking a year off to travel the world?
First, let’s take a deep breath and pump the brakes. Coming into money may mean many more opportunities to you are open, however, we need to approach this intelligently.
“Sudden wealth syndrome” is a term used to describe the adjustment issues, stress, confusion, and often money mismanagement that can accompany coming into sudden wealth or a large windfall. Studies have shown that many times, within 18 months or less, inheritance is GONE 😬
Let’s talk about how to approach receiving a large sum of money and making that inheritance work for you.
Your Financial House
Do you have your emergency fund set aside? Your emergency fund should be about 3-6 months worth of your salary set aside in case .. emergencies come up! That might be losing your job, a huge storm drops a tree through your roof, you suffer an unforeseen illness, etc. It can be tempting to put this off given your recent windfall, but before you do anything else, put this in place! You know the old adage, ‘fail to plan, plan to fail.’
Bye Bye Debt
This is an excellent time to pay off bad debt. Sure it doesn’t feel as fun as buying a boat, but it will feel amazing to not have that weight of debt on your shoulders anymore! Remember, some debt is okay and often unavoidable, and we aptly call that ‘good debt’ - think things like a mortgage, business ownership, etc. But there’s also ‘bad debt’, and that’s things we want to nix immediately because they are continuing to chip away at our bank account - think things like credit card debt that comes with high interest rates, or car loans.
Have Some Fun
We suggest taking 10% of that inheritance and doing whatever your heart desires with it. Life can’t be all rules and red tape 😉
Invest the Rest!
This newfound money can grow! Let it work for you by taking advantage of tax advantage opportunities that will help you enjoy that inheritance today and for years to come.
We know it can be overwhelming to know how to make sure you’re taking care of everything properly, but we are here to help take away or lessen some of that mental stress.
If you have specific questions regarding receiving an inheritance or setting up an inheritance for loved ones, please feel free to set up a time on our calendar!
