It’s a grim thought to realize your parents won’t be here one day. While there is no amount of money that can replace their presence in our lives, many parents, grandparents, and guardians work hard to try and leave something behind for loved ones.
An inheritance can certainly act as a blessing during a difficult time, but is it something you should factor into your financial planning?
A recent study showed 66% of millennials do expect an inheritance from their parents someday, and 43% are planning on using it specifically to pay off debt. This is a risky plan, however.
Inheritance is Potential Money
Even if your parents have told you they have an inheritance set up for you, it’s not something your financial future should heavily rely on. Why?
Let’s say your parents are good, hardworking, fiscally responsible people. They’ve amassed some wealth and property, and they’ve informed you that all of this is set to be passed to you. That’s great. But it’s not a guarantee.
Until it’s in your hands, an inheritance is not your money. You don’t know when you’ll receive it. You don’t know if you’ll ever receive it.
While your parents, grandparents, etc. are still alive, a lot can happen. The market could crash. They could make a series of poor financial choices. You could have a falling out that causes them to change their will. All their money could be eaten up by healthcare expenses.
With people living longer every year, they could end up needing more for retirement than they originally anticipated, using money that would have been left to you.
The point is, you can’t predict the future. But you can make wise financial decisions in the present.
Your Financial Goals Should Depend on Your Money
The only way to create your own financial plan is with the money you have and the money you are presently earning.
That’s not to say you can’t have a plan for inherited money. But this should be a side plan of sorts (come back soon for a discussion on what you can do with inherited money). In the meantime, start by getting your personal finances in order.
External guidance and accountability are crucial not only for forming a financial plan but actually sticking to it. To get connected with a certified financial planner in the Springfield, Ohio area, contact KB&P Partners today!