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Many Americans assume that inheritances will solve their money problems--but don't count on it As life expectancy increases, and older Americans are living longer, the idea of inheriting a significant sum of money has become a hopeful solution for many facing financial challenges. However, depending on inheritances to bail you out of money problems is a risky strategy that could leave you unprepared for the realities of the future. Longer Lifespans, Smaller Inheritances One reason your parents may leave a smaller inheritance than you expect is that their generation is living longer. The number of Americans who are 95 and older grew 48.6% from 2010 to 2020, according to the 2020 Census. The demographic shift towards longer lifespans means that older Americans are not only living longer but also spending more of their savings during their retirement years. As a result, the inheritances left behind may be smaller than anticipated, leaving heirs with less financial support than they might have expected. Medical expenses and long-term-care costs could also reduce the amount of money you’ll receive when your parents and grandparents pass away. Seven out of 10 people age 65 or older will need some kind of long-term care in their lifetime, according to the National Center for Health Statistics. The median cost of a semi-private room in a nursing home is $7,908 a month, according to Genworth’s Cost of Care survey. Additionally, a 2020 Federal Reserve analysis found that the average inheritance was $46,200. However, even that figure was inflated by legacies passed down in wealthy families, according to the Federal Reserve. Uncertainties in Estate Planning, Fraud, and Inflation “People’s assets at 60 can be greatly reduced by the time they’re 85,” he says. “Inflation, the stock market going up and down, and even mismanagement of their finances can lead to parents having less money to leave their children,” says Bill Schretter, a certified financial planner with wealth-management firm Allworth Financial. Fraud losses are another concerning issue. As people age, they’re increasingly at risk for cognitive decline, which makes them more vulnerable to scams, Schretter says. Older Americans lose more than $28 billion a year because of fraud, according to AARP. As a result, the complexity of estate planning, tax implications, fraud inflation, and other unforeseen expenses can significantly impact the amount of money left as an inheritance. Relying on an uncertain future windfall might lead to financial disappointment, especially if unexpected costs or legal challenges arise. The Importance of Financial Independence Inheritances are typically distributed after the passing of a loved one, and it's unwise to hinge your financial stability on events that are beyond your control. If you have immediate money problems, waiting for an inheritance might not provide the timely relief you need. Depending on inheritances to solve financial woes undermines the concept of financial independence. Building your financial security through savings, investments, and responsible budgeting is a more proactive and reliable approach than banking on uncertain future windfalls. Instead of relying solely on potential inheritances, consider focusing on strategies that promote financial independence. This includes building an emergency fund, investing wisely, paying down debt, and creating a comprehensive financial plan that aligns with your long-term goals.

If you find yourself juggling various loans and credit card balances, debt consolidation could be the game-changer Managing multiple debts can be a daunting task. For those seeking a streamlined solution to manage debt, consolidation may be a effective route. Understanding Debt Consolidation Debt consolidation involves combining multiple debts, such as credit cards, personal loans, or medical bills, into a single, more manageable payment. This consolidated debt is often obtained through a new loan or a credit card with a lower interest rate. Three Reasons to Consider Debt Consolidation 1. Simplified Finances Dealing with multiple creditors, due dates, and varying interest rates can be overwhelming. Debt consolidation simplifies your financial landscape by consolidating all your debts into one, easy-to-manage payment. This streamlining not only reduces the chances of missing payments but also eases the mental burden associated with juggling numerous financial responsibilities. 2. Lower Interest Rates and Single Monthly Payments One of the primary advantages of debt consolidation is the potential for lower interest rates. By securing a consolidation loan or transferring balances to a low-interest credit card, you can significantly reduce the overall interest you pay. This not only saves you money but accelerates your journey to becoming debt-free. Additionally, instead of managing multiple payments, debt consolidation enables you to make a single monthly payment. This simplifies budgeting and ensures you stay on track with your debt repayment plan. Additionally, you can customize the repayment term to align with your financial goals and capabilities. 3. Preserve and Improve Your Credit Score When managed responsibly, debt consolidation can positively impact your credit score. By paying off multiple debts and reducing your credit utilization ratio, you demonstrate financial responsibility to credit bureaus. As a result, your credit score may see improvement over time, opening doors to better financial opportunities in the future. Choosing the Right Debt Consolidation Method It's essential to evaluate the various debt consolidation options available and choose the one that best suits your financial situation. Whether it's a personal loan, a balance transfer credit card, or a home equity loan, understanding the terms, interest rates, and potential fees is crucial in making an informed decision. 1. Consolidation Loans Consolidation loans involve taking out a new loan to pay off existing debts. This loan typically has a fixed interest rate and a structured repayment plan. It provides a clear timeline for debt elimination and ensures a consistent monthly payment. 2. Balance Transfer Credit Cards For those with credit card debt, balance transfer credit cards with low or zero introductory interest rates can be an effective tool. Transferring existing balances to a card with a lower rate allows you to save on interest and pay down the principal faster. 3. Home Equity Loans or Lines of Credit Homeowners may consider using the equity in their homes to secure a loan for debt consolidation. While this option may offer lower interest rates, it's crucial to weigh the risks, as failure to repay could put your home at risk. The Bottom Line Debt consolidation is a simplified and cost-effective approach to managing their debts. By embracing this method, you can reduce interest payments and pave the way to a debt-free future. However, it's essential to choose the consolidation method that aligns with your financial goals and to pair this strategy with responsible financial habits.

The U.S. Department of Education is expected to release the Free Application for Federal Student Aid, or FAFSA, by December. 31. Here are the biggest changes to financial aid applications The Free Application for Federal Student Aid—or FAFSA—can be a dreaded process for college-bound students and their parents across the U.S. The FAFSA application has typically been known to be lengthy, confusing, and detailed—resulting in billions of dollars of unclaimed aid. However, the federal government is addressing those concerns by revamping FAFSA. The changes are a result of the FAFSA Simplification Act (also known as "Better FAFSA"), which passed in December 2020 as part of the pandemic relief package. The new FAFSA application is expected to launch on December 31, marking the most significant changes to how students apply for financial aid in decades. “It is going to be substantially different, and that is good news,” said Michael Lemus, the outreach and marketing manager at the California Student Aid Commission. “Although, of course, people are like, ‘Oh my gosh, what’s going to happen?’” “The FAFSA and financial aid process can be very overwhelming, very complex,” Lemus said — something he says applicants have vocalized to officials for many years. “And the good news is that, yes: Those changes are really meant to streamline the application.” Here’s a breakdown of the major changes happening with the 2024-25 form. The timeline will be shortened. A big change is that the FAFSA is usually open from October 1 to March 2. But this year’s release was postponed to incorporate all the changes for "Better FAFSA," with a soft launch expected to open on December 31. Colleges will have to review applications and create financial aid offers in a shorter period, and after receiving those packages, many families will have to make decisions about where to attend on a condensed timeline. The takeaway? Everyone has three fewer months to complete the FAFSA application. Additionally, once you submit your FAFSA, you won’t be able to edit the form until February. For example, if you submit the form the day it opens, and decide a week later you want to add another college to your application, you won’t be able to send your financial information to the new college right away. The bottom line: If you’re considering applying to any other schools, add them to your FAFSA application when you fill it out so you’re not waiting weeks to edit your form. Nothing happens if you submit a FAFSA application to the school but don’t end up applying there. The application will be simpler, with direct transfer from the IRS. One of the most significant changes to the FAFSA application is that number of questions on the form has been cut by over half. Fewer and simpler form questions is largely in part to data sharing with the IRS. Before directly transferring tax information from the IRS was clunky, unreliable, and difficult. Now, it actually will be a requirement for filling out the form online. Once your income information is inputted, you’ll only see relevant questions. Students with lower household incomes and uncomplicated tax filing situations could see as few at 18 questions. More students will qualify for Pell Grants. The formula for awarding Pell Grants has been revamped: An additional 600,000 students will be newly eligible for a grant, while about 1.5 million students who are already eligible for a Pell Grant will now qualify for the maximum award. The shorter, redesigned form is getting a lot of the spotlight, but Cook says the expanded grant eligibility is the “sleeper headline that I want students to know about.” The term Expected Family Contribution is replaced with Student Aid Index. There is a new metric to determine how much a student can qualify for aid, said Shelveen Ratnam, a spokesperson for the California Student Aid Commission. The Student Aid Index (SAI) will replace the term Expected Family Contribution (EFC), which was considered misleading to many families. Instead, the FAFSA form will refer to SAI, which is a measure of financial strength that colleges can then use to award their financial aid dollars. The new figure will still be presented as a dollar amount. “The SAI will help inform how much federal aid, and in some instances other institutional aid, for which a student might qualify, "says Ratnam.

If you find yourself drowning in credit card debt, fret not--here's how to regain your finances Credit cards have become an integral part of our finances. While they offer convenience and flexibility, they can also lead to financial pitfalls if not managed wisely. Here are some practical strategies to dig yourself out of credit card debt: 1. Assess Your Debt Situation: Before devising a plan, it's crucial to understand the full extent of your debt. Gather all your credit card statements and make a list of outstanding balances, interest rates, and minimum monthly payments. This step will give you a clear picture of your financial standing. 2. Create a Realistic Budget: Developing a budget is the cornerstone of effective debt management. Categorize your monthly expenses, differentiating between essential and non-essential costs. Allocate a portion of your income to paying off your credit card debt. 3. Determine Snowball or Avalanche Method: If you’re looking for tried-and-true methods of tackling debt, consider the snowball method or the avalanche method. The debt snowball and debt avalanche methods are two popular strategies for paying off multiple debts. Both approaches focus on eliminating debt, but they differ in their prioritization of which debts to pay off first. The snowball method starts with the smallest debt and works its way up, regardless of the interest rates. Allocate any extra funds to the debt with the smallest balance. Once that debt is paid off, roll the amount you were paying on it into the next smallest debt. Continue this process, "snowballing" your payments from one debt to the next until all debts are paid off. The avalanche method, on the other hand, starts with the highest-interest debt and works its way down. The avalanche method is focused on minimizing the total interest paid over time, by making minimum payments on all debts except the one with the highest interest rate. Allocate any extra funds to the debt with the highest interest rate. Once that debt is paid off, roll the amount you were paying on it into the next highest interest debt. Either method can be successful, in part because it allows you to successively increase the speed at which you pay off your subsequent debts. The snowball gets bigger as every credit card is paid off; while the avalanche increases in strength as you eliminate your high-interest balances. Both of these methods are effective--some people revel in the quick wins of the debt snowball, while others prefer the cost-saving approach of the debt avalanche. 4. Negotiate Lower Interest Rates: Reach out to your credit card issuers to negotiate lower interest rates. Explain your financial situation, and many companies may be willing to work with you to create a more manageable payment plan. Lowering interest rates can significantly reduce the overall amount you need to repay. 5. Consider Debt Consolidation: Explore debt consolidation options, such as transferring your balances to a single card with a lower interest rate. This simplifies your payments and may save you money in interest. However, be cautious of potential balance transfer fees and ensure that the new interest rate is genuinely advantageous. Conclusion: Getting rid of credit card debt requires dedication, discipline, and a well-thought-out plan. By assessing your situation, creating a realistic budget, negotiating with creditors, and exploring various repayment strategies, you can eliminate your credit card debt. Think of each credit card payment as one more rung on a ladder, and you’ll be climbing out of your debt hole sooner than you realize.

We're more likely to spend after a break-up. Should we budget for it? Navigating the aftermath of a breakup can be emotionally challenging, but it's crucial not to overlook the potential financial impact. Financial advisers often push us to have a rainy-day or an emergency fund to cover unexpected expenses, such as medical bills or home repairs. But we are less inclined to budget for expenses associated with emotional turmoil like heartbreak, despite being likely to indulge in them whether we can afford to or not. Scott Rick, a behavioral scientist at the University of Michigan, co-wrote a 2014 study that showed that engaging in retail therapy could reduce anxiety and sadness. As a result, it's not uncommon for people to spend impulsively as a way to cope with a breakup. To avoid derailing your financial goals, set a strategic budget in place as you recover from your heartache. Step 1: Assess the Emotional Damage on Finances Breakups can cause people to spend way over their budgets, and the cost-of-living crisis only exacerbates this. Plus, it’s not just the post-break up shopping that makes break-ups expensive. New research from Experian finds that the average breakup costs a couple $1,287, which includes finding a new place to live. On top of that breakups can lead to emotional spending, from retail therapy to impromptu getaways. Recognize the potential financial pitfalls and acknowledge the need for a thoughtful budget to avoid unnecessary debt. Step 2: Create a Post-Breakup Budget First things first--evaluate your finances. Take stock of your current financial situation, including income, expenses, and any shared financial responsibilities that may have changed due to the breakup. Identify essential expenses; and prioritize necessities like rent, utilities, and groceries. Ensure these are covered before allocating funds for discretionary spending. Next, decide how you want to allocate your discretionary spending as you manage your heartache. Do you need a larger DoorDash allocation because you won't feel like cooking as much? Do you need a going-out budget to reconnect with friends and go out on first dates? Or do you to cordon off a portion of your discretionary spending to sign-up for gym classes or to pick up a new hobby? If you can't afford to set aside much of your budget for discretionary spending, you don't need to splurge on costly retail therapy either. Consider alternative, budget-friendly methods for self-care, such as journaling, meditation, or outdoor activities. Step 3: Resist Impulse Spending Before making any non-essential purchases, give yourself a cooling-off period. This prevents impulsive decisions driven by emotional distress. Carl Richards, a financial planner and director of investor education at the BAM Alliance, recommends waiting 72 hours before purchasing anything outside of your budget. You can also seek support from loved ones, to avoid impulse spending. Reach out to friends or family for emotional support rather than relying on material possessions to fill the void. If all else fails, try filling your shopping cart, but then ultimately abandon it. According to Scott Rick's 2014 study, even found that hypothetical, simulated purchases were soothing. Step 4: Avoid the Pitfalls of Credit Card Debt While some light retail therapy after a breakup is nothing to worry about, understand that excessive spending won't heal emotional fissures. Instead, focus on long-term financial planning, including limiting your credit card usage. Be mindful of your credit card expenditures, and pay attention to your credit utilization ratio. High balances can negatively impact your credit score. Conclusion It's no wonder why heartbreak can take a toll on both your emotions and your wallet. “There are a multitude of reasons why we might spend money more impulsively after a breakup,” explains relationship therapist, Rachelle Watson, “I often see this tendency driven by a need to exercise power or control, especially if we’re on the receiving end of the breakup.” However, by proactively setting a "breakup" budget, you can emerge from heartbreak with both your heart and your finances intact. In fact, Jessica Lyons, a financial advisor at Black Swan Capital advises, “No matter how the breakdown of a relationship occurs, there is a period of adjustment and change. A budget is one area where it is possible to take control. This can be an empowering experience."

Some credit repair companies seem too good to be true in fixing credit score issues--and that's because they are We've all experienced a late payment that hit our credit score; and the years-long process of perfect payment history to overcome that stumble. As delinquencies on credit card debt rise to pre-pandemic levels, the National Foundation for Credit Counseling has seen a demand for credit counseling services. Companies that sell "credit repair" services are also on the rise-- alluring to many people eager for a faster fix to their credit score. However, these companies are rarely effective. Credit repair companies typically blitz credit bureaus with dispute letters with the hope of getting negative information on a credit score removed. But these letters rarely work. If the negative information is accurate, there's no way to have it erased or repaired. Negative information like missed or late payments remains on your credit report for seven years, while a personal bankruptcy stays for 10 years. For people attempting to erase these mistakes, paying for credit repair is fruitless. What’s the best way to protect my credit score? Paying bills on time and keeping your use of credit low are the best way to build and maintain a good score. You should also regularly check your credit score for errors, with free reports from the big bureaus (Equifax, Experian and TransUnion). How can I repair my credit score, if I have issues? You can search online at the National Foundation for Credit Counseling for reputable credit counseling agencies. The Justice Department also maintains a list of agencies that are approved to provide pre-bankruptcy counseling, credit counseling, and debt-management plans. If you’re having trouble with your credit due to missed debt payments, one alternative is to seek advice from a nonprofit consumer credit counseling agency. Such groups can assess your finances and arrange for a debt management plan, which will allow you to pay off your debts over time. Some agencies may charge a fee, which is offset by a lower interest rate negotiated by the agency. However, be skeptical of debt “settlement” companies. These companies pressure borrowers to stop paying their lenders; and instead send their payments to the settlement company. The settlement company then takes a cut of the borrower's payment and negotiates the lender into accepting less money than what is owed. Conclusion Improving your credit score lies in conscientious financial habits. Avoid the allure of quick fixes offered by ineffective debt settlement and credit repair services, as they often come with hidden pitfalls and may not deliver the promised results. Instead, focus on the power of steady, incremental progress. By consistently paying your bills on time and keeping your credit utilization low, your credit score will naturally rise and open doors to better financial opportunities.

How do I convince the love of my life that a prenup protects us both, and isn't an omen that we'll end up divorced before we say "I do"? Dear Metro Money, I'm engaged and thrilled to get married. There's only one problem: My fiancé and I can't agree on getting a prenup. As a woman who may need to leave the workforce to raise children, I want to avoid being left in a difficult financial situation should the worse happen. I've had countless friends and family end up in terrible circumstances post-divorce, because there was no prenup. My aunt and my mom, for example, were both left with nothing when their husbands left them. My fiancé, on the other hand, grew up in a two parent household. His parents are still together without any significant financial problems. He hasn't seen what I've seen; and he believes signing a prenup is an omen that I don't believe our marriage will last. I love him, and I believe we'll have a long happy marriage. But I think his position is irrational and unfair. I don't want to break up, but this feels like I'm sacrificing my well-being to quell what I believe to be highly superficial concerns. - To Prenup, or Not to Prenup Dear Prenup, I'm preaching to the choir but prenups get an unfair shake. While prenups can seem you’re “planning for a divorce,” every couple can benefit from a well-drafted and fair prenup. In fact, a prenup wouldn't just to protect you, it would protect your fiancé as well. An outside party, like an attorney specializing in family law, might help you both understand that better. Ask your fiancé if he would be willing to just take one introductory meeting, to learn more. Maybe that would be a good step in the right direction. If your fiancé still refuses to get a prenup after meeting with an attorney, then you have a deeper rooted problem that even marriage won't solve. It might be worthwhile to seek counseling, to understand where your fiancé's fear is coming from. Have a counselor during sessions constructively address why a prenup is important to you, and alarming for your him. Hopefully, he’ll clearly communicate his fears about the prenup and you'll both be able to manage those fears head on. If you still can't make any headway, then you'll have to decide if a prenup is a deal breaker for you. It's not an easy choice, but given your personal experiences, it's understandable why your fiancé's stance might give you pause. You might need to ask yourself uncomfortable questions about whether this point is one you can sacrifice your position on, or if you need to walk away. Good luck, Metro Money

How do I get my girlfriend to stop procrastinating and to start taking our shared finances seriously? Dear Metro Money, My girlfriend and I have been together for 5 years. We have an incredible relationship and recently moved in together. To that end, we decided to get a joint account for all of our shared expenses, like rent, utilities, date nights, etc. We agreed that since we both make similar incomes that we would contribute to our joint account equally. For the first month, I put in $2,000. She asked to only put in $1,500; and that she would make up the difference in the next month. However, the next month came; and she was short the amount owed to me. She asked to contribute another $1,500; and that she would make up the (now) $1,000 owed to me the following month. It's now time to contribute to our joint account again--and again, she's asked to defer what she owes me to the next month. When I ask her why she's deferred what's owed to our joint account multiple times, she says she's having a tough month and that she needs another month "to get her together." She does seem stressed about money, but we live together and I can see how much she's spending on non-essentials (e.g. shopping, girls' trips, going-out, etc.) I don't want to seem judgmental on how she spends her money, because we aren't married and our finances are largely separate. But at the same time, if she has money for trips and brunch, then she has money to contribute to our joint account. It doesn't seem fair for me to be paying more of our shared bills, so she can "unwind" with more of her own discretionary spending. I feel awful for saying this, but this feels like a deal-breaker to me. I don't think my girlfriend is trying to take advantage of me--she does seem truly anxious and stressed out, and maybe spending on retail therapy helps. But I can't help but ask: what about me? - Me, Myself, and I Dear Me, Myself and I, You're asking: what about me? It's a good question to ask, especially given the situation here: You and your girlfriend agreed on a clear structure to shared bills and expenses, you held up on your end, and she did not. So what now? I think you should sit down with your girlfriend and let her know that her inability to contribute equally to your shared expenses is causing stress in the relationship for you. Ask if she understands the arrangement you two decided on together, and clear up any confusion. If there is no confusion, then probe on why she's unable to pay. If she's genuinely unable to pay (even if you subtract the non-essential spending), then you two need to assess your combined incomes and expenses together. You mentioned that you have similar incomes, but do you have similar income to debt ratios? Is she burdened with a car loan or student debt that you're not thinking about? Perhaps you split your expenses based on the ratio of income brought in, AFTER debt payments. Perhaps you cut certain expenses, in order to keep your shared finances lower. Perhaps she needs to start looking at side hustles or extra income, to make ends meet while she searches for a higher paying job. If she's able to pay, but just isn't--that's a different problem. If she has a deep seated problem of spending money to cope with anxiety, ask her what's causing her stress. Is there something she's afraid to talk about and is silently treating it with retail therapy? If so, it may be worthwhile for her to seek therapy while learning about money management. Lastly, you say this is a deal-breaker for you, which I think is fair. Be honest with your girlfriend about that; and let her know that if there isn't a resolution to this problem, you'll have to consider parting ways. While you can be there to support her, at the end of the day, it's her responsibility to figure out how to handle this longer term. Procrastinating and pushing to the next month is not a good enough plan. Good luck, Metro Money

Talking about money with your partner can help you define financial values, develop strategies to reach shared financial goals, and resolve disagreements about money. Why should you talk to your partner about money? Everyone has different financial aspirations and goals. Discussing these with your partner helps ensure that both of you are on the same page. Whether it's buying a house, saving for a dream vacation, or planning for retirement, aligning your financial goals allows you to work together towards a shared vision, avoiding potential conflicts that may arise if expectations are not clearly communicated. These 50 money-related questions can help you start the conversation. What questions should I ask about spending, saving and budgeting? These financial questions can help you and your partner establish a household budget, agree on how to split bills and identify weak spots in your saving and spending habits: Are you more of a spender or a saver? Do you keep a monthly budget? What is your annual income? How much money do you typically spend each month? How do you typically spend your disposable income? What's the most money you've ever spent at one time? Do you feel it's important to ask for my permission before making a large purchase? Which expenses would you cut to reduce your total spending? Would you prefer to split utilities and other expenses equally or according to our income? Should we open a joint bank account or keep our money separate? How much do you save on a monthly basis? Do you keep an emergency savings fund? How do you maintain your long-term savings? What are your long-term financial goals? What would you do if you received lottery winnings, an inheritance or any other unexpected windfall? What questions should I ask about debt and credit? Each partner's debt and credit scores can have an impact on their shared finances. To better understand how your partner navigates credit and debt, begin with these questions. What are your credit scores? Do you regularly check your credit reports and credit scores? Do you know how your credit habits impact your credit reports and credit scores? How frequently do you pay for things using credit? How many credit cards do you have? Do you know the outstanding balance of each of your credit cards? Do you know when your credit card billing cycles end? How much do you pay in interest each month? How much debt do you currently have? Do you owe money to friends or family? Do you have a plan to pay off your debt? Have you ever fallen behind on payments for a loan or line of credit? Have you ever defaulted on a loan? Have you ever had to deal with debt collectors? Have you ever filed for bankruptcy? What questions should I ask about children and family? Money topics related to family and children can be intimidating, but they're critical if you plan to maintain a future together. Do you owe alimony or child support to a previous partner? How do you plan to teach your children about money? Do you plan to contribute to your children's secondary education? Do you plan to pursue secondary or post-secondary education for yourself — either now or in the future? Would you accept a loan from a friend or relative? Would you lend money to a friend or relative in need? Do you plan to support your parents or other relatives as they age? How much financial assistance would you offer your sick or elderly parents? When you were growing up, did your parents discuss their financial challenges with you? Did your parents teach you any important lessons about money? What questions should I ask about retirement? If you and your partner hope to retire together, you'll also need to make sure you're aligned on your expectations leading up to and during retirement. How do you hope to spend your retirement? Where are you hoping to retire? What is your ideal retirement age? Do you expect to retire when your spouse does or at different times? Do you have a long-term retirement savings strategy? What retirement accounts do you have and how often do you contribute to them? When can you afford to retire based on your current savings? Do you expect to work at all during retirement? What are your current investments? What investments do you hope to make in the future? Conclusion While these questions can help guide important financial conversations, they are by no means exhaustive. Talking to your partner about finances is not just about dollars and cents--it's about building trust and transparency. These conversations may not always be easy, but the benefits are immeasurable.

Inheritance can often feel like a double-edged sword. Learn how to manage both the emotional and financial toll of an inheritance. Inheritances are complicated. While the financial windfall opens up new possibilities, it also brings forth emotional and financial complexities that need careful navigation. In fact, while emotions and grief are high, it’s unwise to make any major financial moves. Instead, take time for bereavement before moving forward with any critical decisions with your inheritance. When you're ready, consider these steps to navigate what to do next: Step 1: Take a Breath and Avoid Spending as a Coping Mechanism Losing a loved one and inheriting money is deeply complicated, with feelings ranging from grief to excitement. Before diving into financial decisions, take some time to process your feelings. Seek support from friends, family, or even a counselor if needed. Understanding and managing your emotions is crucial for making clear-headed decisions about your financial future. While you grieve, consider placing your funds in a high-yield savings account until the emotional dust settles. Avoid impulsive purchases as a way to cope. According to Dennis McNamara at wHealth Advisors, "In the fog of grief, I've witnessed some individuals make impulsive purchases as a temporary form of comfort or escape...which often leads to regret." Step 2: Gather Information and Seek Professional Advice To make informed decisions, gather all relevant information about the inheritance. This includes details about assets, liabilities, and any legal obligations. Consider consulting with a financial advisor, tax professional, and estate planning attorney. These experts can guide you through the complexities of managing inherited wealth, helping you maximize its potential while minimizing tax implications. Justin Donald at Lifestyle Investor agrees--noting, “One mistake I’ve noticed is that people don’t hire a financial adviser. If someone who doesn’t have an advanced understanding of financial management inherits money, it’s a good idea to hire someone to help manage it wisely. A financial adviser can help people make the most out of inheritance, as well as save them the time and stress of managing it alone.” Step 3: Create a Comprehensive Financial Plan Developing a solid financial plan is essential for long-term wealth management. Set clear goals, such as debt repayment, investment strategies, and estate planning. Consider factors like your lifestyle, risk tolerance, and future financial needs. A well-thought-out plan provides a roadmap for making sound financial decisions and ensures the longevity of your inheritance. For example, most people simply retain inherited assets in the form they receive them. If it was a mutual fund, they keep it as is; or they receive art or antiques, they simple store it. When capital passes from one hand to another, it's key to understand the nature and intent of those proceeds. What was the intent of the inheritance? Was a particular antique handed down as a family heirloom or intended to support the beneficiary's financial goals? Or was an investment tailored to fit a specific risk appetite of the benefactor that doesn't align with with the beneficiary's investment strategy? Ensure you're asking the right questions, determine its best use and deploy it accordingly. Step 4: Pay Off High-Interest Debts or Diversify Investments Many people spend their inheritance on "fun" expenses, such as cars, vacations and other luxury goods. While instantly gratifying, these are purely expenses with little benefit toward your future self. Instead, use this inheritance as an investment for the future, such as paying off high-interest debt, setting aside a down payment on a house, opening a brokerage account, or even thinking about continuing education Step 5: Update Your Estate Plan Inherited wealth often involves changes to your estate planning needs. Review and update your will, trust, and beneficiary designations to align with your current circumstances. This ensures that your assets are distributed according to your wishes and minimizes potential disputes among heirs. Conclusion Inheriting money requires careful consideration and planning. By addressing both the emotional and financial aspects of your windfall, you can navigate this process thoughtfully. Seek professional advice, create a comprehensive financial plan, and make strategic decisions that align with your goals. With a methodical approach, you can turn your inheritance into a lasting windfall for yourself and future generations.

The lifetime expense of marriage, two children, homes, healthcare, cars, and education is $3.5M--more than what most earn in a lifetime According to Investopedia, the American Dream now costs $3,455,305—the estimated lifetime cost of common milestones including marriage, two children, homes, healthcare, cars, and education. That staggering amount certainly puts a hard number to a sentiment many people have felt in recent years--that the American Dream is less and less realistic of a goal. Is The American Dream Over? For decades, people were sold on the idea that anyone could achieve the American Dream. There was an optimistic view that anyone—regardless of their background—could move up if they applied themselves and worked hard. However, a recent survey by the Wall Street Journal and the National Opinion Research Center found that only 36% of voters said the American Dream “still holds true,” down from the 53% who believed in U.S. prospects in a 2012 edition of the survey and 48% in 2016. This low confidence in the American Dream is related to rising housing costs, high inflation, burdensome student loans, and record-high credit card debt. As a result, many Americans have delayed major aspirational milestones and purchases, like buying a home, getting married, and having kids. The American Dream Now Costs $3,455,305 While costs are vary state-by-state, here is a breakdown of the lifetime costs of marriage, two children, homes, healthcare, cars: Source: Peterson-KFF Health System Tracker, USDA Expenditures on Children by Families, iSeeCars Study, National Center for Education Statistics, The Knot 2022 Real Weddings Study, Zillow, Synchrony Lifetime of Care Study, U.S. Census, CDC, PolicyGenius Can You Afford the American Dream? Stacy Mastrolia, associate professor of accounting at Bucknell University in Pennsylvania, said she’s not sure if the American dream exists anymore. “If that is the American dream — two parents, two kids, owning a house somewhere — then the average American family needs to be better employed,” she said. Many Americans would agree that sentiment. Less than half of respondents in a 2022 Gallup poll said they think today’s youth will have a better life than their parents — an 18% decline since 2019. “This is the current situation — the middle class isn’t thriving financially, doing the things that our parents did in terms of working one job or living off of one income,” Mastrolia said.

Building long-term wealth means making smart decisions with your finances, regardless of how high your income is 1. Splurging on Luxury Items Just because you may have enough in your checking account to spend on designer apparel, expensive watches, or luxury cars doesn't mean it's a good idea. As many people start to earn a higher income, they start to ignore their budgets and fall prey to lifestyle inflation. As a result of life style inflation, people end up spending at the expense of saving or investing. Before you know it, you've diluted your wealth instead of growing it. “Buying luxury items can be a significant drain on your finances,” said Ryan Cullen, co-founder and CEO of Cullen Cioffi Capital Management. Instead, build your wealth by investing in assets, like stocks or real estate. 2. Gravitating toward Risky Investments One of the biggest mistakes higher earners make is believing they’re better investors than everyone else. This overconfidence bias can lead to risky investment decisions that can sometimes lead to huge losses and even financial ruin. For example, take the meme-stock boon or the cryptocurrency rush in 2021. Millions of investors created brokerage accounts to capitalize on a runup in prices. However, if they got in or sold at the wrong time, it could have cost them significantly. 3. Assuming a High Income is a Given Many people with high incomes assume that they'll always earn one. However, in the U.S., income typically peak for people in their 40s and 50s--and even go down from there. It doesn’t mean you’ll suddenly go from making a high income to a low one. But it does mean you need to take advantage of your peak earning years by managing their spending wisely and making smart investments. Too many high earners fail to do this. Another risk is income loss due to layoffs or unemployment. Regardless of how much you earn, we're all susceptible to a sudden job loss. In fact, Americans earning six figures lose their employment at three times the rate of low-income workers, according to Bank of America. 4. Neglecting Tax Implications Building wealth through a high income doesn’t do much good if you're not minimizing your tax liability through prudent tax planning and strategizing. “Even the affluent can overlook the tax implications of their financial decisions,” Jake Claver, founder of the wealth management firm Digital Ascension Group, told GOBankingRates in an interview earlier this year. “From selling investments at the wrong time to not leveraging tax-advantaged accounts, these oversights can erode their wealth.” 5. Investing in Overpriced Financial Products Financial products like annuities, whole life insurance or high-fee mutual funds may promise high returns, but they often come with significant fees. If you want to grow your wealth, consider low-cost index funds or exchange-traded funds (ETFs) instead. Not only are the fees lower, but ETFs typically provide strong diversification, tax efficiency, and lower volatility.