What to Do with an Inheritance

inheritance, last will, money matters, money advice

The average American inheritance is $177,000, according to CNN. This means that if you’re reading this, you probably have quite a bit of jingling in your pockets. Since $177k is average, that’s the number we’ll use for this scenario. So the question is… how should you use a $177k windfall?

Think of the Person(s) Who Gave You the Money

The last thing you want to do is disrespect the deceased. Consider how they may like to see the money spent.

I read an article recently about a man who scrimped and saved for decades. He never bought anything beyond the necessities. Once he passed, his nephew inherited his multi-million dollar fortune. The kid bought a supercar with much of the money. The license plate said ‘ForTom’. What a shame.

But ultimately, the person gave you the money. They chose you. It’s your choice how it gets used.

Assess Your Situation

Do you have any ‘bad’ debt to pay? Bad debt is debt which will not result in more money. It’s usually credit card debt. This is debt that’s guaranteed to keep costing you more money in the long-term. A business loan, for instance, is good debt. You may make more on the business than on the interest of the loan. Keeping good debt is okay. Many wealthy people have good debt.

If you have high-interest debt, I recommend you end the relationship. Reason being, it’s a bad deal. With the stock market, getting 8% is within reason. Thus, debt up to 8% can be seen as okay because you can make more money investing it rather than paying off the debt. However, if your windfall is large enough, it’s probably a good idea to get rid of all debt. It may help you sleep better at night.

Get Yourself in a Secure State

Once you’ve dealt with debt, look at your surroundings. Are you happy? Is this where you want to be in life? Consider upgrading certain areas of your life (within reason!). This means getting a new roof for your house, putting your daughter through college, or buying reliable transportation. You want to feel secure with your life.

Use the Inheritance to Make Even More Money

Here’s the fun part – you can use that money to make more money! I’m not talking about gambling… I’m talking about investing. Which, I suppose, is a form of gambling. But it’s about the safest kind of gambling out there. It’s how most people create wealth.

Consult a financial professional before making any decisions. This blog post is not a be-all, end-all for you. Each persons investment plan will look different. But for the most growth, look to equities. If you want to play it safe, go for bonds. If you want something in-between the two, buy your age in bonds and invest the rest in equities. Avoid money market funds, certificates of deposits, cash, etc. Those don’t even keep up with inflation. ‘Investing’ in those vehicles will cause you to lose money.

Our other articles on real estate can help if you want to use your inheritance to invest in real estate:

Setup a New Pattern in Your Life

An inheritance is a gift that keeps on giving, when properly used. An inheritance means your financial situation stays elevated – for life. Then, once you pass, you can pass on the wealth to another generation. How fulfilling would that be?

Before making any decision, I suggest to wait at least a month. Let yourself adjust to having six figures at your disposal. I can imagine that would be life-changing. That’s more than most people make in an entire year. Here’s a wrap up:

  1. Give thanks
  2. Assess your situation
  3. Get yourself in a secure state
  4. Invest some of the money
  5. Keep the tradition alive.

Finally, if you want comprehensive advice on dealing with your inheritance money, consider picking up a copy of The Sudden Wealth Solution: 12 Principles To Transform Sudden Wealth into Lasting Wealth.  The book has something like 5 out of 5 stars on Amazon.com and the reviews have been favorable.   At under $40 bucks, its solid investment if you do anticipate receiving an inheritance.  Get a copy here.

Join our newsletter

If you like Critical Financial, subscribe and get our latest content via email.

Powered by ConvertKit

Share this post:

Recent Posts

Leave a Comment

*

People count the money to buy a house in future success.

Avoiding Mortgage Scams: Don’t Fall for Unreasonable Promises

If it sounds too good to be true, it probably is. That’s sound advice for almost all aspects of life, including the search for... more →
Eat for free for a whole month via the meal kit companies discounts for new customers.

How To Get a Month of Free Food: 9 Meal Kit Companies Offering Discounts to New Customers

Play your cards right and you might be able to line up a month’s worth of free meals if you were to try out all nine of the meal... more →
Generate extra cashflow -- here are 97 ways.

96 Awesome Ways to Generate Extra Cashflow

Who doesn’t want more money nowadays? We’ve got you covered on that front. Here comes a long list of different ideas on... more →
Valentine's Day gifts that won't destroy your budget

Valentine’s Day Crafts Are Romantic Rescue from Crazy Inflation

Fall for the hype this week and you’re out an average of $143.56 for Valentine’s Day. Crafts and other do-it-yourself tactics... more →

Ultimate Guide to Bitcoin — FREE Ebook!

Have we got something for you: a free ebook about bitcoin! more →
Get a flu vaccine.

Why You Need To Get a Flu Vaccine Right Now

Flu vaccines aren’t just for the elderly  anymore. Here are 25 reasons you should go get vaccinated. more →
Financially successful

Acquire the Trait All Financially Successful People Have

Financially successful people tend to all have a lot of self-discipline. Improving your discipline in one area of your life often spills... more →

What’s the Best Free Recipe App?

The Apple Store and Google Play together offer more digital cookbooks than you probably have room for on your mobile device. So which... more →
New tax law might slow down housing market.

What Will the New Tax Law Do to the Housing Market?

The new tax law will have a profound impact on the housing market, although in ways that go beyond the deductibility of mortgage interest... more →

4 in 5 Households Will Get a Tax Cut in 2018

Four out of five U.S. households will get a tax cut as a result of the legislation that President Donald Trump signed into law today. more →
Will bitcoin reach $100,000?

When Will Bitcoin Reach $100,000?

Bitcoin has accelerated its pace of appreciation in recent months, and if the current levels between $15,000 and $19,000 make you itch... more →
The Dow Jones topped 24,000 -- now what?

The Dow Jones Crossed the 24,000 Threshold. Now What?

Stocks appear to be increasing in volatility, yet the markets closed on Monday, December 4 with the Dow Jones Industrial Average is... more →
Peer mortgage

Should You Get a Peer-to-Peer Mortgage?

If you can’t get approved for a home loan from a bank, you might want to look into applying for a peer-to-peer mortgage. more →
Investment gifting is awesome.

4 Things To Know Before You Donate an Investment

While donations of any kind are appreciated, gifting investments benefits both the giver and the receiver. Here are four key things... more →
Are you wondering: What's the Relationship Between the Stock Market and Federal Debt?

What’s the Relationship Between the Stock Market and Federal Debt?

Wouldn’t it be wonderful if gains in the stock market could actually reduce U.S. government indebtedness? If that were true,... more →
investing in gold, investment, stock market

Why Do People Invest In Gold?

Why do people invest in gold? The short answer to this is because of uncertainty. When prices of gas, oil, and other basic commodities... more →