A windfall of wealth is fun. One day you’re watching the Canucks on TSN, and the next, you’re sitting in the third row behind the penalty box. But before you blow it all on expensive cocktails and omakase sushi, there are a few things you’ll want to do. The first and most important step: talk to a financial advisor.
The baby Boomers, the second-biggest generation in US history, are calling it a career. They lived through some wild times – Vietnam War, Woodstock, and civil rights battles. Now, as they pass the torch, us younger ones are dealing with some hefty inheritances and the responsibility to handle them wisely.
Picture this: one day you’re hit with an inheritance. Emotional, right? But here’s the deal – emotions can lead to some seriously bad financial moves. You don’t want to become a statistic.
Studies show that the majority of people who receive an inheritance blow through the money within five years.
Not a smart financial move or a great way to say thanks to your benefactor. Sure, buying a truckload of gourmet ice cream after a tough day is one thing, but blowing through an inheritance in five years? That’s a financial fumble.
Rule number one:
Hit the pause button. Don’t rush into major purchases or investments and be on guard against financial sharks looking to take advantage of your emotional state. Don’t let them run a fast break on you.
But don’t sit on your hands forever either. When you’re ready, team up with a financial planning pro.
And here’s the playbook:
Create a plan for your newfound wealth. Work with a financial planner who knows the ins and outs of tax and estate planning – it’s like having a coach who knows every play in the book. Build a solid foundation with an emergency fund and tackle those high-interest debts.
Once you’ve got your defense set, it’s time for the offense. Plan for the future – retirement, college funds for the kids – the whole nine yards. And when the short- and long-term goals are in the bag, you can start eyeing those mid-term goals – a home, a business, maybe even some charitable moves.
Handling a financial windfall after losing a loved one is never easy, but it doesn’t have to be. If you find yourself in this situation, or you’re gearing up for it, consider working with ARC Wealth, we put you and your goals first.