You’ve come into some money from an inheritance. Whether you’ve been expecting the money or it was a total surprise to you, you’re in the position to do something good for your finances if you react rationally instead of emotionally.

It can prove to be too tempting when people get a lot of money handed to them all once. They can make some bad decisions that can come back to haunt them.

To make sure you don’t become one of those people, you need to develop a strategy.

Think About Your Goals

You need to align this money with your core values and the goals you hope to accomplish financially and emotionally.

If you have a goal of working fewer hours, but you’ve found yourself trapped in a vicious cycle of working overtime each week to pay down your debt, it makes sense to use that inheritance to pay some of that debt off. Then you can reduce your workload a bit.

Or if your current finances were doing fine before the inheritance came along, you could use a bit of the money to indulge yourself in your dreams of traveling more.

Knowing your goals and what you want out of life is crucial to figuring out what to do with your inheritance, so it’s time to do some soul-searching.

Create an Emergency Fund

If you don’t already have an emergency fund, now is the perfect time to do it. Use part of the money to set one up.

If you hate the idea of parking that money in a savings account that barely draws any interest, you could put a couple thousand in the savings account and use a money market account for the rest of the emergency fund money.

It will draw more interest than a standard savings account will and there will be more restrictions on when you can use it. You’ll still be able to access the money in a true emergency, but you’ll be less likely to tap it when it’s in a money market account.

Pay Off Credit Card Debt

If you have credit card debt, that’s the absolute first debt you should retire with your inheritance. The high APR you’re paying can sink your financial goals, so it makes sense to take care of that debt first. After it’s gone, try to avoid credit card debts at all costs.

Tackle Other Debt

After the credit card debt is gone, use your inheritance to pay off any car loans or even your mortgage if there is enough left. It will help you reduce how much money you have to shell out monthly. After you’ve reduced your overhead, make sure you bulk up your retirement savings to really put those lowered monthly payments to work for you.

Add to or Start Your IRA

Starting an IRA or bulking up the one you already have is a great strategy for long-term growth. This will help ensure your inheritance will continue to work for you in the future.