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Not everyone is lucky enough to inherit a large sum of money. In fact, some people find that they are the ones supporting their own elderly parents. But, if you are one of the lucky ones who receive an inheritance, how do you honor it and not blow your money?

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Alex Cockroach via Compfight

Slow Down and Think Before Spending

First, do not immediately go out and blow your money and then regret it. Think things over carefully. If you receive an inheritance and plan carefully, it can change the rest of your life and your retirement for the better. Look at how the inheritance money will affect your balance sheet. If you are in a situation where you have a hard time making ends meet, think about using part of your inheritance to invest in a fixed annuity that gives you a set amount of money for life.

Drawing Out Money as You Need it

If you are already financially ready for retirement, holding on to your inheritance and drawing out the money when you want or need is best.

Keep a Memory of Your Loved One

Your inheritance money should have an emotional attachment with the person who left the money for you. You want to honor your inheritance, and do something special to honor the one that left it for you. Things like buying a small beach house so that the entire family can gather together and reminisce about the person who left the money is a great idea. Something like this might support the values that grandma had when she was alive. Do something that represents the loved one who wanted to leave you with a special gift.

Use the Money to Serve You Best

On the other hand, it is also fine to do what you want to do with your inheritance. If you get stuck on doing what grandma wanted you to do and keep your inheritance invested the same way grandma did, you might need to think twice. Look at things from a broader perspective. These assets were given to you to serve you. You want use them in the way that they serve you best.

Consider CDs, Bonds and Emergency Funds

Until you do figure out what you want to do with your inheritance, consider short-term CDs or top-quality municipal bonds. If you do not have an emergency fund that would keep you going for six months, use some of your money to create that fund. You should always have immediate access to your emergency fund.

Paying Off Debt

Spending your inherited money is not always a bad thing. Before you go on a spending spree, pay down all your debt, especially credit cards that have a high interest rate and loans for vehicles. If your mortgage will be hard to pay once you retire, pay some of that down.

Consider Your Retirement at All Times

Always think about your own retirement. If you have always wanted a new car, but you have a car note now, pay off the current car loan, trade in your car and buy a new car paying cash with the money you inherited. Use the car note money that you no longer have to pay for a savings account for your retirement.

Using Your Inheritance For College

If you have children, think about using the inheritance money for their college education. This way, your kids will not be strapped down with a load of student loan debt.

No matter what you do with your inheritance, think about it first before making any concrete decisions. Plan for the future, but keep the memory of your loved one alive if at all possible.

Roger Rudd is a freelance blog contributor. He specializes in business and finance articles, and this article was written on behalf of Approved Cash Advance.
 

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