Smart Money Strategies Protect Unexpected Income,
For those fortunate enough to find themselves with unexpected income through an inheritance, the task of managing a large amount of sudden wealth at once can seem daunting. However, a smart financial plan can boost confidence in your money management skills and optimize your new assets “If you make quick decisions without financial planning, the money could disappear quickly. Planning for sudden wealth includes tax planning, investing, and taking a step back to consider how the money can help you reach your financial goals,” according to the website of the CFP Board, a nonprofit organization dedicated to supporting professional standards in personal financial planning.
If you inherit money, consider these guidelines from the CFP Board to make sure you take full advantage of your good fortune:- Keep quiet. Some people may know as soon as you do that you have inherited wealth, but don’t be pressured by others offering investment advice or seeking loans or support. Don’t broadcast an inheritance until you have a plan for its use.- Don’t rush. Consider enlisting the help of a professional financial planner; at the very least, step back and take some time to consider how you might spend or invest to use your resources wisely. Educate yourself about the options for saving and investing in smart wealth management.- Make a plan.
If you don’t have an overall financial plan, unexpected wealth is a reason to make one. If you already have a financial plan in place, you can update your goals and advance on some of them sooner than expected, such as paying off debt, saving for retirement, or establishing an emergency fund. Sharing wealth can be part of your plan, too.
If there is a cause you feel strongly about, plan to allocate some of your resources to that cause, and consider getting involved in the organization to determine how your contribution will be spent.- Have some fun. It’s okay to splurge on a few special items if you are confident in your finances overall. A new car or a special trip can be a worthwhile use of some of your newfound funds; set aside some money for indulgent purchases, but take your time to identify something you will truly enjoy. Visit letsmakeaplan.org for more financial planning tips and guidance and to locate a certified financial planner in your area.