The BEST Way To Use Your Inheritance
Today we're diving into a scenario that has everyone daydreaming – inheriting money. But before we get into the nitty-gritty of what you should do, let's hit the streets and see what people think they would do if they suddenly came into a million dollars.
- Watch the TikTok Video: What Would You Do If You Inherited $1 Million?
Now, let's get real. Inheriting money is more than just spontaneous splurges and quitting your day job. I'm here to lay down the three foolproof steps you should take when faced with a financial windfall.
Step 1: Fortify Your Financial Foundation
Emergency Fund and Debt Repayment:The first move is universal, whether you're inheriting money or not. Strengthen your financial foundation by setting up a robust emergency fund. Aim for 3-6 months of living expenses in a high-yield savings account. Simultaneously, pay off any high-interest rate debts exceeding 7%.
Step 2: Play the Long Game – Invest!
Maximize Tax-Advantaged Retirement Accounts:Don't let your newfound wealth vanish; make it grow! Max out your tax-advantaged retirement accounts and consider a TARGET DATE FUND. Tailor it to your retirement year, aligning risk profiles with your timeline. This strategic move ensures your inheritance isn't just a temporary windfall but a lifelong financial asset.
Step 3: Balance and Enjoyment
Give Back and Treat Yourself:Balance is key to a healthy financial strategy. Give back to a cause you're passionate about – not only does it feel good, but it's usually tax-deductible. Then, indulge a little. Allocate a small portion, say 20k, for an amazing trip or an outrageous purchase. Enjoy the fruits of your inheritance while keeping an eye on your financial future.
- Watch the TikTok Video: Reaction Highlights
So, whether your dream is a down payment or funding a milestone event like a wedding, remember, a solid financial foundation sets the stage for achieving those goals. It's not just about what you want now but what you'll need in the future.
I hope this guide sheds light on the right financial steps to take when you inherit money. Follow for more valuable insights, and as always, stay rich!