This, perhaps, is the most sensitive of subjects I've written about. It comes on the heels of returning from the funeral of the infant son of some dear friends of ours. Since I learned of their sudden loss earlier this week, I have been reflecting some on how losing a loved one affects our ability to make decisions about money. My advice on this subject is to abstain. Don't make any major decisions about money for at least 6 months, if not a year, after losing a loved one. This is especially true if you have lost your spouse. When grief is so raw and tangible you can touch it, your ability to make wise decisions is clouded. You are clearly not yourself and don't need to rush into decisions that you might regret later. This includes but is not limited to: shopping to fill the void, investing in anything, and buying and selling real estate. My one exception to this is to sell a home if you can no longer afford to live there.
When it comes to insurance payouts, park the money in a CD or other savings account for a time to just cry and work through your grief. Seek support groups and trained professionals to help you through the process, to begin to heal. When and only when you feel like you are returning to a sense of normalcy, then you can use the money to pay down any debts you may have, including your home. After that I would make sure you have a full emergency fund of 3-6 months of expenses. Then, if you have any money left you can move on to investing for your children's or grandchildren's college or for your own new future. Don't however (and this goes for all investments) invest in anything you don't fully understand or that sounds too good to be true. No matter what, give yourself time to grieve. This is your time so take it and don't feel guilty about it.
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