Inherited some money from a loved one? It’s up to you as to how you spend your inheritance. Below are just a few ideas as to how to make the most of your inheritance.
Put It Towards Your Pension
Your inheritance could be put towards your pension, giving you more money to live on during retirement. Of course, if you’re already retired, this could be money to spend here and now. If you’re not due to retire for quite a few years, you could consider investing your inheritance into a savings account, bond or stocks. A wealth management firm may be able to help you invest your inheritance in the most profitable way. Steer clear of investment strategies that could be very risky – you don’t want to lose all your money.
Set Up an Emergency Fund
You could set aside your money for future emergencies. Examples of emergencies could include medical bills, car repairs and home repairs. Many of us pay for these emergencies with loans – having an emergency fund could prevent you from having to take out loans so that you have less debt in the long run. It’s worth putting your money into a savings account that you can access regularly.
Pay Off Your Debts
If you already have debts, consider whether you could pay some of them off using your inheritance. In the long run, you could end up paying less in interest fees and you’ll free up some disposable income. This could be a particularly good way to spend your inheritance if you’re currently struggling with debt. The snowball method is one of the best ways of paying off debt – this involves paying off your smallest debts first and then moving onto your largest ones.
If you’re not already a homeowner, your inheritance could possibly be used as a down payment to buy a home – or at the very least could be put towards a down payment. Alternatively, if you are a homeowner, you could use the money to renovate your home. You could even consider buying property to rent or buying property as a vacation home.
Get an Education
You could consider using your inheritance to pay for a course. This could give you expertise or qualifications to improve your job prospects. Most people pay for higher education with a loan – by using your inheritance, it may be possible to obtain an education without having to take out a student loan. At the very least, it could allow you to borrow less.
Allow Yourself Some Luxuries
You don’t have to invest all of your inheritance into your future. Set aside a little bit of it to spend on a few luxuries that will bring you immediate happiness. This could be money towards a vacation, new furniture or new clothes. If you’re going through grief after losing someone close, such luxuries could be much needed for cheering you up. The key is to not spend too much on these luxuries – ideally no more than 20% of your inheritance.