It’s up to you how you spend your inheritance. While you’re free to fritter it all away on impulse purchases, most of us feel that we ought to put it towards a good cause. This post offers some advice on how to get the most long-term satisfaction out of your inheritance.
Factor in taxes
Tax laws regarding inheritance vary around the world. It is possible that a person’s estate may not be eligible for tax if it’s under a certain amount. If it exceeds this amount, the tax will usually be paid out before you receive your inheritance – so you don’t have to pay anything yourself.
If you inherit property, you may have to pay capital gains tax on this. This will affect the amount of wealth you will receive and is worth looking into.
Consider paying off any debts
A good way to spend your inheritance could be to free up disposable income each month by paying off some of your debts. For those in a lot of debt, this could be a chance to wipe the slate clean by finally paying off those credit cards and emergency loans.
Prioritize paying off the smallest and highest interest debts. It’s unlikely you’ll want to spend all of your money on paying off debts unless your ultimate goal is to be debt-free (for example, if you’re nearing retirement and still got a mortgage, your inheritance could help you to pay this off, freeing up money for your retirement).
Consider investing some for the future
It could be worth investing some money for the future. This could be money for retirement, a child’s college fund or simply money to leave behind. You could put it into a high-interest savings account or consider investing it somewhere that could make a higher return.
Many people find that they are able to make a big return by investing in stocks. Alternatively, you could learn the basics of forex trading with the The Forex Library’s training course. There could also be the option of investing in real estate or even collectibles.
Prioritize personal goals
Are there any personal goals you’ve been eager to chase but haven’t had the money to pursue? Now could be a time to chase these goals finally. Examples of such goals could include:
- Buying your first home
- Getting an education
- Arranging your wedding
- Starting a business
- Traveling to a dream destination
Prioritize these goals before spending money on more impulsive personal luxuries. It’s all too easy to spend loads of money on a spontaneous vacation or a home makeover and then realizes that you haven’t got enough funds left over for your goals.
Pay for treatment/repairs
Have you been putting off seeking out certain medical treatments because of the cost? Or perhaps you’ve been putting off necessary home repairs? These urgent treatments and repairs could also be worth prioritizing. Consider these needs before you consider your goals – especially if your health or your personal safety is in danger.