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If you are fortunate enough to inherit an unexpected income stream, managing large amounts of wealth can be daunting. A financial plan that optimizes your assets and boosts your confidence can help you increase your money management skills.
“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,”The CFP Board is a non-profit organization that supports financial planning professionals.
These guidelines are from the CFP Board if you inherit money to ensure you maximize your inheritance.
– Keep quiet. While some people might know that you have inherited wealth as soon as they do, don’t let them pressure you with investment advice or loans. You should not announce an inheritance until there is a plan in place.
Don’t rush. You might consider hiring a professional financial advisor. At the very least, take some time to think about how you might spend your money and invest it wisely. Learn about your options for investing and saving for smart wealth management.
Plan. Unexpected wealth is an opportunity to have a comprehensive financial plan. A financial plan can help you update your goals and make progress on certain ones sooner than expected. For example, paying off debt, saving money for retirement, or setting up an emergency fund. You can also share the wealth. Consider donating some resources to a cause you believe in. You might also consider joining the organization to decide how your contribution will be used.
Have fun. If you feel confident about your finances, it’s OK to spend a little on some special items. Spending money on a new car, or for a trip to a foreign country, can make sense. However you should be careful about choosing the right item.
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