The BEST Way To Use Your Inheritance

Written By:
Haley Sacks
(aka Mrs. Dow Jones)

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.

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.

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!