When one receives an inheritance there is usually a bit of sadness that accompanies the financial largess. Because we often associate receiving an inheritance with emotional strain and stress it’s often better to sit back and wait before we spend any money.
Susan Bradley has written a wonderful book on what she calls sudden money® events. In this book she states that she believes an inheritor should wait about a year before they make any major financial decisions. I agree with this thought and often recommend to my Clients that they sit on their money and get used to the new level of net worth they’ve achieved.
There are several things that can happen when one receives an inheritance. Some of these things are good and some can be challenging. I encourage you to think about each of these items and if you’re about to or have recently received an inheritance see how they might affect your life.
- You now have the ability to do things that you haven’t been able to afford before. What does this mean in your life?
- You have found yourself in a fight with other members of your family about how your inheritance should be treated.
- You have friends who have wonderful ideas for how you can use your money. These ideas are not always very good, in fact they rarely are.
- You’re being “hounded” by investment advisors wanting to help you invest your newfound wealth.
- You don’t want to spend any of your inheritance because you feel guilty about receiving money in this manner.
- You feel a great urge to spend the money that you’ve received. If this is true, breath a few times and put the check writing pen away.
Each of these issues brings with it a certain amount of strain and risk. It’s important for you to stay in control of both your emotions and your money. I like the idea of doing nothing for a year when one inherits a reasonable amount of money. This gives you a chance to get used to your newfound wealth.
As always, I’m interested in what your thoughts might be on this topic. Please send me an email at Jpatrick@stage2planning.com or leave us a comment with our comment button on the side.