No matter the reason why someone receives a sudden windfall of money, as soon as they do, it can turn their world upside down. Whether it’s winning the lottery or inheriting money, this windfall of cash can be an immediate emotional rollercoaster.
The hope is that when you do receive an increase in the amount of money you have available, you choose to do something smart. This is precisely the situation one Redditor posting in r/AusFinance is considering, having recently inherited hundreds of thousands of dollars.
Suddenly Inheriting Money
As a 30-year-old, this Redditor, who earns approximately $90,000 to $100,000 per year with zero debt, now finds themself in a situation where they have an additional $500,000 to $600,000 in savings. With no assets besides their car, which they already own, they are now flush with enough cash to make some really big financial decisions.
On the plus side, this Redditor is already showing strong signs of financial intelligence, but is indicating that they don’t want to mess around with the money. They are fully aware that this won’t happen again, so making a good decision with the money now is crucial to ensure it lasts well into the future.
Aside from not being a self-proclaimed financial guru, there also has to be a time for this Redditor to mourn whomever left them this money. As anyone who visits any finance-related subreddits knows, inheritances can go one of two ways, and the second way often leaves people in more debt than they had before receiving any money.
The good news is that the Redditor is actively seeking the right advice, and while they should consult a professional, gathering some starter ideas from fellow Redditors isn’t a bad place to start.
What To Do Next
At the very top of the priority list is a warning that this Redditor should absolutely, positively, not tell anyone about this money. While we don’t get any insight into their relationship status, this is enough money to have someone look for a handout or expect you to suddenly buy a larger home, rent a bigger apartment, and so on.
In other words, keeping this inheritance secret, beyond any immediate family who are already aware, is the best move the original poster can make. The next big piece of advice is to take things slow, as you don’t have to make any big, immediate moves. The hope is that you can take some time to come to terms with someone’s passing emotionally, and that they left you money.
Another significant step would be to pay off any debt you have, but thankfully, the Redditor is already in a position where this isn’t a concern. This is a great place to be, making the next step all the more reasonable. If the Redditor were in a position where they had even a small amount of debt, the first step would be to pay it off and remove this headache from their plate.
Emergency Fund and Invest
With no debt to speak of, the Redditor’s next step is to look at how to set up an emergency savings fund. As this is an Australian personal finance subreddit, it may operate differently from the United States. However, finding the equivalent of a high-yield savings account at a local bank would be ideal. As is the case with most financial advice, setting aside at least 6-12 months’ worth of expenses in an emergency account is the best and most immediate financial advice.
Of course, nothing may be more important than finding a fiduciary financial advisor who can help determine your next best course of action. This individual will likely tell the Redditor not to invest in any property or real estate right away, but to set up the savings account and then start thinking about long-term growth.
The absolute best step for this Redditor is to look at something like an ETF and just chill. Allowing the money to compound in interest over the next few decades would help them not just retire comfortably, but likely retire early.
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