Millennials are already receiving inheritances from their parents that can radically alter their life path. But not everyone wants to retire to a beach with their parents' money and stop pursuing their own lives. If you enjoy your career, want to forge your own identity, or intend to start a business, then make sure your inheritance is a help, not a hindrance. Here are a few key tips to ensure that it boosts your own efforts rather than change who you are.
1. Craft a Financial Plan
Financial planning may not be the most exciting thing for a young person who's just received a large sum of money to think about, but it will help you make wise decisions about your new portfolio. A financial plan is the result of research, consideration, and strategy. It slows down the spending process and encourages thoughtful planning. You also get the help of a seasoned professional.
2. Be Charitable
If you won't be spending your whole inheritance supporting a more luxurious lifestyle, why not donate to those who could use it more? Planned charitable giving provides you with a sense of pride and accomplishment, and it puts the money to good use. Modern financial tools, like donor-advised funds, foundations, and charitable trusts help you design a charitable giving plan that can best fit your interests.
3. Create a Safety Net
If you want to maintain your own independence outside of your parents' money, set it up as a financial safety net instead. This means less aggressive investments and a focus on wealth and asset protection. You won't have to worry about a Plan B and can then pursue your own goals, such as entrepreneurship, knowing you can take the risk.
4. Designate Separate Use
Use your inheritance in a way that will encourage you to do more. For instance, you might decide in advance to use your inheritance to get a business off the ground and not use it for fun money. By spending your own income for pleasure rather than a lump sum of inheritance, you're more likely to keep down spending and use both pools of money wisely. Set ground rules for it and stick to them.
5. Build Your Parent's Legacy
If your parents worked hard to earn their money but you want to earn your own, use theirs to build a legacy for them. Plan charitable giving that aligns with their interests. Purchase assets that they would have enjoyed, such as an art collection to share with others. Or ensure their child has a secure future by putting the money away for your own retirement. You can honor them and still focus on being your own person.
Where to Start
No matter what you decide to do with your inheritance, you can develop a smart plan for it while still being motivated to strive for great things for yourself. The best place to begin is to consult with an experienced wealth management planning professional. Make an appointment today to get started.