There are various ways how one may inherit money- but mostly from parents/ relatives or maybe a settlement amount.

One would think that when a person inherits big money, life would just get easier and everything he/she ever dreamed could now become a reality. However, it isn’t so. Most people who inherit money tend to spend it all within 18-24 months of inheritance. Big expenses like homes, fancy cars, fancy vacations, new businesses, gambling are pretty much the big reasons for splurging the newly acquired cash. If one has to manage inherited money better; first of all take a break of at least 6-9 months when the money is acquired. For example, leave it in a liquid fund- it might not earn too much, but will keep the temptation to spend or take hasty decisions; away.

Changed realities: Money and life are closely linked. Money doesn’t buy happiness, but it can surely ensure that you lead a happy life. Now that you have inherited money (be it property/ investments/ any other form) you should reassess your financial goals (as they were) and see how this inherited money helps you achieve your goals. Are the goals reachable now, is there something that can be fast-tracked or scaled up; are these goals the ones that are important to you? These are questions you should sit, think through and discuss with family members and your planner/advisor.

Have the “money talk”: It is important to have the talk with your spouse/ family members to discuss what this inheritance means to you and to your family’s situation. Do not go overboard with ambitions and expenses, but at the same time, an upward revision is possible keeping in mind that you have gained more than you had anticipated. If you have had a financial plan done in the past, this would be a time to revisit the same; if you haven’t, this might be a good time to get one done.

The idea is that the money that has come to you should make your quality of life better. However, any decisions made hastily might defeat the whole purpose. If you were in a job you hated or had had enough; this might be a good time to look at an alternate vocation, something you have been passionate about. But, remember to evaluate the options this has brought and do not count on this to stay forever. If money is not coming in regularly, even the deepest of treasures will eventually dry up; so beware of this before you change jobs or jump in to try your hand at your new business. Money can definitely give you freedom, but beware of the pitfalls it brings too, especially when it comes all of a sudden.

“Money doesn’t change a person, it just reveals who you are” goes the old saying. So, let it reveal the right qualities!

Originally published on Aug 11, 2015, 01:39 PM IST | Source: Moneycontrol.com 

Author: Lovaii Navlakhi