Receiving an inheritance, especially an unexpected one, might leave you feeling a little overwhelmed by the options. Ideally, the money should bring you closer to financial independence, but many heirs don’t know how to handle a windfall and end up no better off than they were before. The first mistake people make is they spend the money on themselves. The second mistake is that they may choose bad investments because they consider the inheritance to be found money and take on too much risk. Its fine to have a little fun by spending a little on discretionary purchases but the first priority should be to develop a strategy.
Northern River Financial starts with an inventory of your financial life by taking a close look to determine if you have adequate insurance, are carrying too much high-interest debt, are on track for retirement and have an emergency fund. It is important to make sure your foundations are in place. Everyone’s financial life game plan will look different depending on age, level of debt, whether they are supporting children or parents, and how they want to live in retirement. The point is to gain financial stability in the pressing issues and put the remainder toward reaching your goals such as paying off high-interest debt, maximizing RRSP contributions, and supplementing your children’s RESPs.