3 smart things to do when you inherit money
When you inherit money from a loved one, it can be tempting to indulge in a luxury. Maybe the car of your dreams or a long vacation? While it isn’t necessarily bad to use at least some of your inheritance for a bit of fun, be sure not to make an impulse decision on how to use your newly acquired funds. American retirees expect to leave a average inheritance of nearly $ 177,000 to their heirs, and in several countries this figure is much higher. An inheritance can be extremely helpful for your financial health, but it’s not something you can necessarily expect or fully rely on. And once you inherit a little cash, it can be difficult to know how to best handle it.
Most importantly, you will need to slow down and think about what is best for you before you act. According to consumer reports, the very first thing you should do with your money is “park” it. People who exhaust their inheritance in a short period of time are usually either going to spend crazy or make bad investments, so this is a time when it may be better to save than invest, at least in the beginning. Consumer Reports recommends placing the funds in an FDIC insured money market account first. Putting the money in a checking account would make it too easy to spend. Another option is a 3 month CD with an early withdrawal penalty, which will save you from making rash decisions.
Once you’ve successfully parked your money, you can take the time to think about your options. At this point, some consumers will feel more comfortable consulting a financial planner, but will be choosy when it comes to choosing an advisor. Paid financial planners are recommended because they don’t work on commission, so they won’t try to sell you investments you don’t need. Whether you’re seeking professional help or managing your own inheritance, here are three smart ways to use your funds to stay financially healthy.