Who hasn't daydreamed about coming into some extra money? The things we would buy, the debt we would pay down, the trips we would take are probably among the most common of these ephemeral thoughts before the morning alarm rings or you remember that email you were supposed to send. Once reality sets back in, those daydreams appear very much what they were: dreams.
But maybe these dreams have something to teach us. After all, becoming the unexpected recipient of money is far from unheard of. Aside from winning the lottery or tripping over a pot of gold, there are other ways in which many people do find themselves suddenly richer than they had been. For example, each year an untold number of people are surprised to find themselves the beneficiary of an estate or unclaimed property.
Going back to those daydreams for a moment, with an eye as to what they might have to teach us, it might be wise to note that so many of them have very little to do with money. Although it may sound obvious, there is value in realizing that these flights of fancy are in fact a reflection of actual desires that could be achieved and problems that could be solved in one's life with the help of money.
Considering this fact, thinking about how an unexpected sum could be put to use to take care of problems and realize some desires isn't just a pleasant way to waste time while pretending to work, it is also prudent. Those who have some idea of what they would do with this are more likely to find ways to put unanticipated funds to beneficial uses and avoid the pitfalls that often come along for the ride.
Yes, pitfalls. Although this is not something usually associated with a windfall, many have learned the hard way that an unpredicted payout is not the magic escape from all troubles many imagine it to be. While a sizeable inheritance can obviously open up new possibilities, it can be equally disrupting. It can put strain on family and other relationships, thrust difficulties and burdens decisions upon the recipient, and sew confusion. What's more, unlike lottery winnings or other significant increases in wealth, an inheritance is the most often the result of the death of a person who most likely cared a great deal for the beneficiary, or on the other hand, may never even have known them. And that fact can be the source of guilt and other complex feelings that can cloud one's judgment or make it hard to take any decision at all.
For this reason, many financial planning professionals suggest waiting a period of six months before making any big spending decisions. Then, hopefully enough time has elapsed for the thickest smoke to clear from emotions and the thrill of increased wealth, and you will be able to resist the most unreasonable impulses. And once you've decided that the gold plated yacht can wait, the fact that, as of 2014, according to a report by Bankrate.com, about 70% of Americans between the ages of 18 and 29, 33% of those between 30 and 49, and 26% between 50 and 64 have not even started to save for retirement should give one pause.
Although so much depends on the particulars of each individual case, every beneficiary should do their best to make sure his or her inheritance will be a boon the prosperity of their entire life or their family, and not blown on a few misdirected whims. And the process of becoming more responsible for more resources will inevitably lead to further conundrums.
One of the more subtle traps that people with modest means who come into a large chunk of money fall into is the temptation of feeling like they no longer have to worry.
A sudden relief from immediate financial pressure can lead to a false sense of security. With a newfound buffer between constant and pressing financial obligations, many become dependent on having a sizeable sum stashed away. But, after a prolonged period of a diminishing nest egg, they may find themselves not only without savings, but also with stagnant or even declining income.
Still, it's not all worry, lucky inheritors. Despite the fact there are so many things to look out for, there are as many positive possibilities. While there is copious advice as to what to do with your money, you must realize that the last word comes down to you. And in the end, isn't this the very purpose of having it? To be able to make your own decisions about your life, to be generous in those areas where you deem fit, and to be comfortable are things we all aspire to; all of these things require responsibility. And inheriting property can be a very good opportunity to grab ahold of this responsibility. That is the intensely personal aspect that renders all general-purpose financial advice, especially for those in the uncommon position of receiving an unexpected inheritance, mutable.
That said, one solid tip is to distinguish between needs and wants. By acknowledging wants and relegating them a place – for example, depending on your new means, that gold plated yacht might become a small schooner or a modest sailboat if that's your druthers – you will have already diminished temptation while planning accordingly towards your future. If you are self-aware enough to know the point where your needs end and your wants begin, you will not only be ready to inherit millions from that infamous long lost uncle, you will also be ready to make responsible and exciting financial plans for any income bracket. Who could think of a better way than dreaming of an inheritance to get you there.