Receiving an inheritance can be a life-changing experience, giving you a foundation to build future wealth. Unfortunately, many people aren’t sure how to use the resources their loved ones leave behind, which may lead to mistakes and wasted opportunities. To put you on the right track, here are a few ideas for spending an inheritance wisely.
4 Ways to Use a Family Inheritance
1. Pay Off Debts
While immediately investing the funds might seem like the best approach, paying off consumer debts can have a much bigger impact on your long-term financial health. The opportunity to live your life debt-free doesn’t happen very often, and eliminating your monthly payments will allow you to save and invest far into the future.
2. Set Aside Emergency Savings
A job loss or other financial emergency can happen at any time, but having the resources to address it will provide peace of mind and minimize the damage to your finances. Putting three to six months’ expenses into a money market account will cover you if the unexpected occurs.
3. Invest in the Future
Once you’ve lowered your monthly expenses, put a portion of your inheritance in mutual funds with a strong record of growth. If you’ve never invested before, talk to a financial manager about how to choose funds and diversify your investments to minimize risks.
4. Splurge on Yourself
Your departed loved one would want you to enjoy some of the money they left behind, so don’t feel guilty about replacing your vehicle or going on a short vacation. Just make sure to take care of your long-term needs before spending on short-term indulgences.
If you’re planning to leave inheritances to your beneficiaries, make sure your estate documents are in order with the assistance of the legal professionals at Ng & Niebling. For over 40 years, they’ve provided comprehensive estate planning services for families throughout Honolulu. With their extensive expertise, they will help ensure your final wishes are respected and your loved ones receive the inheritances you intend. To schedule a free initial consultation, visit their website or call (808) 732-7788 today.