Inheriting or just getting your hands on some unexpected money means that you have a few options in terms of what to do with it. Sure, the most tempting thing to do is, of course, to go on a year-long vacation and just live your life for a bit – but this is definitely not the smartest decision you’ll ever make.

Although I haven’t found myself inheriting a lump sum of money, I do have a few thoughts on how to use it. Here are a handful of tips in terms of what to do when you have a lump sum of money so that you’re not just able to invest it wisely but even get ahead in life. It’s the kind of stuff you’re going to be so grateful for in ten years time and it will make you a more responsible and a richer person, with time.

First: Pay off debt

Before you’re able to get rid of as much debt as possible, there’s no way that you should be spending this money. Consider the different types of loans you have, first of all, and pay off the ones that are putting you back the most each month.

Keep in mind, however, that some students loans are quite favorable in certain countries, in terms of taxes and government support. That’s why you should consider waiting with the loans that have a really low interest or where the interest doesn’t start to run before a certain time.

Consider paying off the higher interest ones to start with. Your credit card debt is an easy option, of course, as well as your student debt. If you own your home, this is the perfect time to get rid of it as well so that you won’t have to be paying the bank back every single month.

Next: Build up a savings account

While getting rid of debt is the most important thing you can do for yourself, the second most important is definitely to make sure that you have a healthy amount of savings to fall back on.

The basic idea is to have an emergency fund. This is something that will keep you afloat in case times should be tough so that you don’t have to turn to your credit card or your family members for help.

Try to have about six months worth of savings in this account and don’t touch it unless it’s an actual emergency. We’re talking about a layoff, naturally, or if you should happen to run into some unexpected expenses. Emergency funds are the pinnacle of financial security and the more money you’re able to invest in this one, the more comfortable you’ll feel with life, in general.

A good rule of thumb when you inherit money or get your hands on a larger amount is to have a chat with a professional to make sure that you’re making the best decision. That way, you can rest a bit easier at night, knowing that your debt is paid off – and that your cash can generate even more cash without any effort from your side.

Then: Consider buying a home

If you don’t own your home, you should definitely consider investing in this now while you’re still able to. You might want to get an investment property as well, though, in case you already have a condo or a house so that the money you’ve got is able to make you even more money, over time.

Have a look at a penthouse for sale, for example, if you’re able to invest in this as it may increase in value after a few years. If you should choose to rent it out and live somewhere smaller, you’ll have a great passive income that will ensure that the money you invested is able to generate an even bigger income down the line.

Another option is to buy property overseas – and especially if you already own a property in your home country. You could rent this one out as well when you’re not on vacation there but make sure that you’ve checked the rules and regulations in the specific country you’ve chosen. It just makes it a bit easier to make an educated decision and not rush into something you don’t know enough about quite yet.

As with any financial windfall, try to make a smart financial decision. Be smart and a) pay off debts, b) build up your savings and c) consider an investment, like a house!