1. Have a strategy
The first thing you should do with an inheritance is figure out how you can use it to set up financial security for your future. So first up – have a strategy. This is important because a common mistake people make is blowing the money on things for themselves and suddenly the inheritance is reduced to rubble in less than two years.
2. Take stock of where you are at
If you’ve inherited money, you need to know what your financial situation is now so you can make a realistic plan. Your personal circumstances will influence how best to use your inheritance. Whether it’s better to put the money towards paying down debt, investing, your retirement or starting a business, all are going to depend on the amount of money you’ve inherited and what will serve you best financially. Get your financials together and see what the fiscal lay of the land is.
3. Get advice
It’s a very good idea at this point (if not before) to speak to your financial adviser, who can really help you plan how to use and grow your inheritance. Your adviser can also help you with any tax implications of your inheritance.
4. Don’t rush into action
If you’ve had a financial windfall, take your time before taking action. The temptation is to feel like you have to do something, but you really don’t. Acting too hastily can lead to trouble. Paying off your mortgage without thinking about future income in your old age, for example, could leave you living debt-free but in poverty.
5. Watch out for high risk investments
When you’re given money, especially if you weren’t expecting it, it does not always have the same value as when you have earned it. The danger is that you may be tempted to put it in high risk investments or business ventures. A slow and steady approach to financial independence may not be as exciting as a get-rich-quick scheme, but it may serve you better in the long term.
6. Enjoy
While it’s good to use an inheritance wisely, this doesn’t mean you can’t enjoy some of it immediately. When you create your strategy, factor in some fun spending. It’s all about balance.
If you have received or are expecting to receive an inheritance in the near future, now may be the time to speak to your Financial Adviser at Altitude Financial Group. Send an email or call (07) 3209 2300.
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