Ask Away Blog: 4 Smart Ways To Spend Inheritance Money

Monday, April 9, 2018

4 Smart Ways To Spend Inheritance Money

Inheriting money always comes out of a bad situation but every cloud has a silver lining. If you manage it properly, that inheritance money can help you secure your finances for the future and put yourself in a stable position for retirement. Or it could be used to help out the family and pay for your kid’s education. But if you just spend that money on frivolous things, you’ll waste a big opportunity. If you’ve recently inherited some money, here are some of the best ways to spend it.



Clearing Debts

If you’ve got a lot of debt hanging over you it can cause you a lot of problems, both financially and emotionally. Saving money is almost impossible when most of your expendable income is going into paying off those debts. But when you inherit money, you’ve got a good opportunity to
get yourself out of that hole and start building up some savings again. A lot of people don’t like the idea of spending all of their inheritance on clearing debts because they see it as wasting the cash that they could spend on something better. But what you’ve got to keep in mind is that you’ll have more money in the future that you can spend on fun stuff, rather than just spending the inheritance on one single holiday or a new car.


Invest In Property

If you invest your inheritance wisely, you can turn it into a revenue stream that will give you more money for the rest of your life. One of the most popular investments at the moment is property because prices are always increasing and you can charge a lot of money in rent. If you use the money to
buy a new home, you can rent it out to pay the mortgage and then either keep it and carry on renting it out or sell it and make a big profit. Either way, you’ll make your money back and then some.


Emergency Fund

It’s always good sense to have
an emergency fund but most of us just don’t have one. If you get hit with an unexpected expense like a car or home repairs and you haven’t got the money to pay for it, you’ll probably end up borrowing money to cover the costs which just puts you in a bad financial situation. You can avoid that by sticking most of that inheritance money in a savings account and just leaving it there. If you hit hard times in the future, you’ll have it there as a buffer and you won’t have to get yourself into debt.


The 10% Rule

Being sensible with your money is great but there are always going to be things you want to buy for yourself and that’s fine, just stick to the 10% rule. Put aside 10% of the inheritance money that you can spend on a holiday or a new car, and don’t go over that amount. That way, you’ll still have 90% left to make some sensible, forward thinking investments with.

It’s tempting to spend all of that extra cash on fun stuff but that’s not going to improve your finances and your life in general in future. It’s much better to invest it wisely and reap the long term benefits.












1 comment:

  1. Wow I've never really thought about it but you make some good points here.

    ReplyDelete

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