Analyze your own financial situation with one addition; you have inherited $1 million dollars from a long lost relative (tax free)! There is one caveat with the money, you can’t spend it on whatever you want. Use the Personal Balance Sheet and follow the bulleted items below to work through your financial obligations and opportunities that the $1 million brings.

• First take care of current responsibilities (liabilities), things like a mortgage, credit card debt, current or past bills, car loans, etc. Include a detailed discussion on your current obligations to be taken care of first with the $1 million. Consider the total dollar amount for current obligations and begin deducting your finances from the $1 million (on the Balance Sheet).

• Next, consider the future, look at how you can make the money work for you. Consider what you would put into things like investments, retirement, property, etc.

• Next, look at any physical assets you may wish to invest. A new home, or possible rental properties, maybe gold or silver, or another type of commodity. Again, weigh the risk and return to make sure the investment is worth your money.

• When you get to the end, if you have a balance remaining, you will need to decide what to spend it on within the items you already considered (i.e. if you purchase a house, you may wish to set aside the excess into a money market account, CD (cash deposit), or other interest earning account to help pay for yearly taxes or insurance on the house). So this could be as easy as setting up a savings account or something along those lines.

Answer rating: 100% (QA)

Personal Balance Sheet BALANCE Total Cash Cash Equivalents Cash Gift 1000000 Total Cash BALANCE 1000... View the full answer