Inheritances often throw people for a loop. It can be an emotional rollercoaster as you figure out what to do. You’re going about your day-to-day life, and suddenly, your financial situation is completely changed. You may feel like other people around you don’t understand, have some guilt about your good fortune, or something else altogether. All of that is completely okay and totally normal.

Everyone’s personal situation is different, and what you end up doing with the money you inherit is 100% up to you. We’re simply here to provide a little advice along the way.

Here’s our inheritance how-to guide:

Step 1: Give yourself some time.

An inheritance almost always comes with the loss of a loved one, and that in and of itself is difficult. You might feel confused, upset, stunned, even guilty. The last thing you need to do is make big financial decisions under this emotional haze.

Take a deep breath. Stash the funds in a savings account for the time-being. Then, when you’re ready, start talking with folks you can trust for advice. Seek out direction from financial advisors, lawyers, and accountants. Ask for professional opinions on how to move forward with the funds you received, and get all your options out on the table.

Step 2: Prioritize your goals.

Now that your mind is clear, figure out how this lump sum of money comes into play with your existing financial goals.

We advise folks to prioritize paying off debts over consumption. It can be very freeing to greatly decrease your debt load, not to mention de-stressing your monthly cashflow. If you have a lot of other goals you’ve been stewing on for years and years, perhaps splitting the funds to reach those is the thing for you.

Shore up your emergency fund, use a portion to start that business you’ve always dreamt of, take the next step in your education, or sock a bunch into retirement savings. Perhaps you’d like to do some charitable giving you’ve never been able to afford before.

Review your financial plan and move forward with finally checking off those goals of yours.

Step 3: Dream a little.

After you’ve taken care of your financial business, it’s time to have some fun. When else in your life do you have unexpected extra money laying around?

That said, be mindful about the total value of your inheritance. We’re not saying go off the spending spree deep end. There’s nothing wrong with loosening your spending belt though: take your family on that vacation you’ve always wanted, buy something nice for yourself, finally get that costly home renovation taken care of. Be confident that you’ve been responsible with your inheritance first, splurge a bit, and then get back to living your life.

Want to dive deeper into your own personal situation, or have any questions for us? Reach out anytime. Take our risk tolerance questionnaire to get started.