When receiving a large sum of money such as an inheritance, knowing how to manage that money can sometimes become overwhelming. It’s important to remember that there are lots of other people who have gone through the exact same process, and the great news is that there are lots of great resources available that can help you better understand how to manage an inheritance, and what you can do with the money you receive.
In this post, we’ve broken down some of the key things that you can do after receiving an inheritance, to help you better understand how that money can be used to benefit your financial future.
Seek Financial Advice if You Need It
While some people might have experience handling large sums of money, receiving any size of inheritance can be daunting. Many people struggle to know what to do with the money once they’ve received it, so it is important to seek advice if you need it. Speaking with a financial advisor can help you better understand what the money you’ve received can be used for, and how you can maximize the inheritance to benefit you long-term. A financial advisor will also be able to help you better understand the taxes that can come with receiving an inheritance as well.
It’s important to remember that often, you will be receiving an inheritance after dealing with the loss of a family member, so don’t feel like you have to rush to a decision. The grieving process looks different for everyone, so seeking financial advice can be a great way to take some of the burdens off your shoulders when you receive an inheritance.
Pay Off Debts
After receiving a sum of money from an inheritance, whether big or small, it can be tempting to want to splurge and buy something nice that you might not have had the ability to buy before. However, it can be worthwhile to take a step back and look at your overall financial situation. If you have existing debts, receiving an inheritance can be a great opportunity to either pay off or pay down some of those debts. While some might immediately start looking towards using the money for their children’s education and future, it’s important to think about your own financial security.
If receiving an inheritance gives you the opportunity to be debt-free, then using the money to pay off any existing debts is going to set you up for a more financially stable future moving forward.
If you have inheritance money left after paying off any debts, investing is a great way to ensure that the money you’ve received will continue to benefit you in the future. As mentioned before, there can be a lot of emotions tied to receiving an inheritance, so don’t feel like you need to rush into anything. When the time is right, set up a meeting with a financial advisor and go through the different investment options that are available for your inheritance. In some cases, it might be beneficial to slowly invest your money over time, or it might be worthwhile to bump up the amount you’re contributing into an RRSP or RESP.
Investing can be a great way to help ensure a financially secure future for yourself, while also making sure your inheritance is working for you to benefit you and your family for years to come.
While receiving an inheritance can come with a lot of emotions and uncertainty about how to move forward, hopefully, these tips can help you better understand what to do with your inheritance to ensure a good financial future for yourself.