An inheritance is a powerful legacy. It is an expression of the deceased’s regard for you – their whole life’s work.  It is meant to benefit you positively, essentially looking out for your long-term interests now that whoever left it for you is not there to chip in. To this end, inheritance financial assets should be used prudently.

In my opinion, the money should be used in a way that will grow and increase your financial standing in life. Whether it’s getting out of debt, making investments, making a large (wise) purchase, or improving your living standards – an inheritance can be a powerful force in your life, which is probably what was intended by the deceased relative who left it to you.

Here are 6 expert tips on how to make the best of your insurance money:

1. Understand Your Inheritance

Inheritance is anything someone leaves behind for you when they die. It can be of any nature, ranging from comic books to hard cash. Whatever the case, it is important to understand the actual inheritance – especially if it is extensive and covered in difficult legal jargon. However, a reputable estate planning lawyer will break it down and advise you how to use it.

Many people picture their inheritance in piles of cash, but this is rarely the case. Inheritance mostly comes in the forms of savings or investment accounts and property. So, what will you do with a beach house on the coast or an condo in the city? How will you get the bank to release the deceased’s money from their accounts? Will you be paying any taxes on your inheritance?

Don’t rush to spend your inheritance before you even understand what it is. Get the lawyer to break it down for you, and consult an accountant to summarize it in a way you will understand if necessary. Understanding what your inheritance means will help you make informed decisions when spending and investing it.

2. Consult an Expert

Getting an inheritance is not something we do everyday, or very often at all, and as such, probably brings a lot of unknown and uncertainty around how and what to do with it. A financial advisor is like a voice of reason when you have a large inheritance and have no idea how to use it. They will stop you from spending it recklessly and ruining your legacy while going broke. More importantly, they will advise you on how to use your inheritance money so that it benefits you positively – and grows bigger, ideally.

As such, consider hiring a trustworthy and competent financial advisor if you did not already have one. It is especially advisable to retain the services of the deceased’s financial advisor, as they have great insight into the estate and how the deceased would have wanted it to be used.

A good financial advisor will be of no use if you don’t follow their advice. You need to trust their judgment and understand that they are only interested in helping you make the best use of your money.

3. Service Your Debts

You are in financial servitude as long as you have outstanding debts. You will continue losing money on the interest, and the interest will grow bigger and bigger the longer your debt is outstanding. To this end, it is highly advisable to pay off your debts when you come into some money, such as an inheritance.

As such, use the inheritance money to pay off your debts – or down, depending on how big they are and the size of your inheritance. Additionally, remember to use your inheritance money wisely to avoid incurring more debt in the future.

4. Invest Wisely

Investing is the wisest thing you can do with an inheritance – it is the wisest thing you can do with any money! It is what your benefactor would have wanted: to see someone pick off where they left growing their money. It is also the best way to guarantee your present and future financial stability.

Simply investing is not enough – you need to invest wisely so that you get good returns on your investments. If you’re new to investing, go back to step #2 and get some exert help. In my experience, low-cost index funds have always treated me well.

Some of the best investment options include stocks (and other financial securities) and real estate. To this end, it is advisable to rent out inherited property instead of selling it. However, it should be noted that stocks can be volatile, creating the risk of incurring losses.

5. Splurge Sparingly & Thoughtfully

The worst mistake you can make with your inheritance is treating it like a random financial windfall and squandering it. It would be a slap in the face of your benefactor, considering their years of hard work building the wealth for you. It would also be bad for your future – stories of people who squandered large inheritances and ended up dirt-poor are all too familiar.

It is okay to celebrate your inheritance but do it thoughtfully. As such, consider buying a good house to live in instead of renting a luxury yacht for a party. Do things that will ensure a financially secure future tangibly rather than things that will only leave regretful memories. It is advisable to consult your financial advisor before making significant purchases of any kind.

It would also be thoughtful to spend some of the money in honor of the deceased. It can be something as simple as paying the funeral costs or as elaborate as setting up a charity in their honor.

6. Leave Some for Your Heirs

An heir definition is anyone who will inherit any of your possessions. It can be your spouse, kids, or a close friend – you get to choose.

As mentioned, an inheritance is a selfless expression of love and caring. It is one of the best ways to cushion your loved ones from the financial impacts of your death. It is also the right thing to do, considering that someone else did it for you.

As such, use your inheritance money wisely and ensure that you leave enough behind for your heirs. Endeavor to leave them more than what you received by investing the money wisely.

Final Thoughts

An inheritance is something to be proud of – proud enough to put it to the best use possible. These tips are a good starting point. As such, be prudent about how you spend your inheritance money. Make sure that it helps improve your living standards and financial standing, as your benefactor intended!

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