What to Do With a $100,000 Inheritance: Your Guide to Smart Choices

And what not to do if you want to get the most financial benefit from it Trending Videos

A substantial inheritance can have both positive and negative effects; positive because the recipient will have the financial means to put it to good use rather than just throw it away. Heres a step-by-step guide for anyone who has received or is anticipating receiving a large inheritance.

Congratulations on receiving a $100,000 inheritance! This is a significant windfall that can help you achieve your financial goals and improve your life. But with great wealth comes great responsibility. It’s crucial to make smart choices with your inheritance to ensure it benefits you in the long run.

Here’s a comprehensive guide to help you navigate your options and make the most of your $100000 inheritance:

1. Take a Deep Breath and Don’t Rush into Decisions

Losing a loved one is a difficult experience, and making major financial decisions during this time can be overwhelming. Take some time to grieve and process your emotions before jumping into any financial commitments. Remember, there’s no rush to decide what to do with your inheritance.

2. Honor Your Loved One’s Legacy

Consider how your loved one would want you to use the inheritance. Were they passionate about a particular cause or charity? Did they value financial security and independence? Reflecting on their values and wishes can guide your decision-making process

3. Assemble Your Dream Team

Don’t go it alone! Surround yourself with trusted professionals who can provide expert advice and guidance. This dream team might include a financial advisor, tax attorney, estate planning lawyer, and real estate agent. They can help you navigate the complexities of managing your inheritance and make informed decisions.

4. Prioritize Your Financial Goals

What are your financial aspirations? Do you dream of owning a home, retiring early, or traveling the world? Identifying your goals will help you allocate your inheritance effectively and achieve your long-term dreams.

5. Pay Off Debt: The Smartest First Step

If you have high-interest debt, such as credit card balances or payday loans, prioritize paying them off with your inheritance Eliminating debt frees up your income for other financial goals and provides peace of mind

6. Build Your Emergency Fund: A Safety Net for the Unexpected

Life throws curveballs. Having a robust emergency fund can help you weather unexpected expenses, such as medical bills or job loss, without derailing your financial progress. Aim to save 3-6 months’ worth of living expenses in a high-yield savings account.

7. Invest for Your Future: Grow Your Wealth

Investing a portion of your inheritance can help you build wealth over time and achieve your long-term financial goals. Consider a diversified portfolio of stocks, bonds, and real estate to spread your risk and maximize your potential returns.

8. Give Back to Your Community: Share the Blessings

Sharing your good fortune with others can be incredibly rewarding. Consider donating to a worthy cause, volunteering your time, or starting a scholarship fund in your loved one’s memory.

9. Enjoy Yourself: Celebrate Your Good Fortune

While it’s important to be responsible, don’t forget to enjoy some of your inheritance! Treat yourself to a dream vacation, purchase a meaningful item you’ve always desired, or simply relax and savor the financial security your inheritance provides.

10. Seek Professional Guidance: Get Personalized Advice

Navigating a $100,000 inheritance can be complex. Consulting a financial advisor can provide personalized guidance tailored to your unique circumstances and goals. They can help you develop a comprehensive financial plan that maximizes your inheritance’s benefits.

Receiving a $100,000 inheritance is a significant opportunity to improve your financial well-being and achieve your dreams. By following these steps, you can make smart choices with your inheritance and ensure it benefits you for years to come. Remember to take your time, seek professional guidance, and prioritize your financial goals to make the most of this life-changing event.

Don’t Assume You’ll Get It

First of all, don’t count on receiving a sizable inheritance if you’re hoping for one day but haven’t received the funds yet. Things can change. Towards the end of their life, your relative or another benefactor may have substantial medical or nursing home expenses. They may decide to leave it all to charity. They may be swindled by a con artist.

According to the Federal Reserve, the average inheritance today is approximately $46,200, which many families may find useful but not revolutionary. The average inheritance across all ages and income levels, according to a different Penn Wharton Budget Model study, is $12,353, and the size of the inheritance is highly correlated with income. Put another way, if your family is low income, you won’t get much, if anything at all.

According to a 2011 study by the Bureau of Labor Statistics, there was never the anticipated boom in inheritance that was expected to occur when the generation of World War II veterans passed on their wealth to their baby boomer children. Between 1989 and 2007, only about 21% of households reported receiving an inheritance or gift of assets. The heirs to the baby boomers accumulated wealth may be likewise disappointed when their day comes.

It is for this reason that younger people should move on with their own financial lives, try to avoid taking on too much debt, invest as much as they can for the future, and not rely on an unexpected windfall.

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And what not to do if you want to get the most financial benefit from it Trending Videos

If you receive a sizable inheritance, consider your options carefully before making a decision.
While you’re making decisions, a federally insured bank or credit union account can be a good, safe place to keep your money.
Using an inheritance to pay off high-interest debts like credit card debt is a wise move.
Most of the time, you won’t pay taxes on money you inherit, but there may be tax ramifications for other inherited assets like real estate, retirement accounts, or securities.

What Should I Do With A $100,000 Inheritance?

FAQ

What is the first thing you should do when you inherit money?

Keep your inheritance to yourself (for now) The first step financial advisors typically suggest, especially if you’ve come into a large sum of money: Keep quiet. That might go against your instincts to squeal about your new-found wealth, or even share that wealth. But there’s time for that later.

Can I deposit a large inheritance check into my bank account?

You can deposit a large cash inheritance in a savings account, either through a check or direct wire to your bank. The bigger question is what you should do with it once it’s deposited. While that is ultimately your decision, it helps to have a plan. The more prepared you are before you get the inheritance.