Since the recession, people have become much smarter when it comes to their finances and budgeting for the future. Did you know, the average middle class British citizen leaves around £125,000 of inheritance behind currently? No-one expects to receive an inheritance, but if you’re one of the lucky ones who has, you may be wondering what to do with it. For many people, it’s a much larger lump sum of money than they’ve ever seen before, so while using part of it to have some fun is fine, it’s also wise to use it in other ways. Here’s what you can do.
Pay Off Debt
Of course, the smartest thing to do with an inheritance is to pay off any debt you have. Perhaps you could pay off personal loans, car payments or even your mortgage. The point of doing this is to increase your disposable income and your assets. That way, as the years go by, you’ll have a better chance of leaving a significant inheritance for your heirs, allowing them to themselves in better financial standing in turn.
Save It
You don’t have to decide what to do with your money straight away. If you’re having difficulty in making a decision, you can always open a savings account and place your money there. Go for the account that offers the most interest, so you can make money on your savings while you’re deciding. In the UK, you also have the option of opening a LISA, which helps people to save for retirement. You make a deal with the bank to keep the money in your account until you turn 60 and you can then have it back, plus interest in one lump sum if you wish.
Start a Business
They say you have to have money to make money, and that’s often true. So, if you’ve always dreamt of leaving your job and opening a business, now could be your chance. However, don’t just jump at the chance and throw your money away. You need to do your research first, make a business plan and plan financially. You could consider franchising a business instead. If you see a business you’d like to run and they’re looking to expand by franchising, all you’ll need to do is pay the money to set it up because the rest of the work is done for you.
Property Investment
Property investment is another long-term plan for making money from your inheritance. Whether you choose to buy properties, do them up and then sell them on, or you decide to become a landlord, there’s money to be made. Again, you should do your research before jumping into this option because it’s not as easy as it sounds, and often comes with nasty surprises. But, if you’re willing to take the risks, the rewards are often high.
The temptation to spend an inheritance on holidays, cars and other luxuries is hard to resist. So, don’t make any hasty decisions that you may end up regretting later on.
