Financial Tips for Managing Your Inheritance

Written by: Joe Martinez, CFP®, Shareholder, Entrust Financial®

Inheriting money can be a life-changing opportunity and provide financial stability. On the other hand, it could lead to excessive spending, with a beneficiary quickly exhausting new-found wealth. When you inherit money, which result would you choose?

Having guided many clients to the outcomes they desire, I would like to share three tips, to help you and those you love be smart and avoid costly mistakes.

Take Your Time

Receiving an inheritance can be an extremely emotional experience. Acting too quickly—whether by making new investments or going on spending sprees—can lead to regrets down the road. A great rule of thumb is to wait a year before making decisions. This permits you to take a step back and approach your financial decisions with a thoughtful plan of what you want the money to do for you.

Set Clear Financial Goals and Priorities

Having clear goals is essential to making the most of your inheritance. Think about what truly matters and what you hope to achieve with this gift. Whether it is paying off debt, investing for retirement, building an emergency fund, or saving for something special, defining your goals will help guide you to the right decisions.

Assess Your Financial Situation and Consult with a Financial Professional

Navigating the complexities of an inheritance can be overwhelming. Consulting with a financial professional, such as a CFP®, can help you understand how your newfound wealth may enhance your financial picture and thus allow you to experience financial security and freedom.

My clients who have approached this journey with mindfulness have been able to use their inheritance to have more financial choices. Hopefully you, too, will discover that your choices increase and that these tips allow you to enjoy the journey.

Remember, the decisions you make today will shape the financial landscape for you and those you care about for years to come!