A Reddit poster asked recently about what lifestyle changes he should make after an inheritance. He wrote that his father had saved a lot of money and left millions to his sisters — but he didn’t meet the requirements to inherit so his sisters ended up giving him just $30K and he isn’t sure what to do with it.

He did spend $5,000 already and is planning to spend another $5K to put a lease on a truck — but isn’t sure how to best use the limited funds that are remaining. 

His post raises some important questions about how to handle an inheritance the right way. 

How to decide what to do after receiving an inheritance

The right steps to take after an inheritance are going to depend on a lot of factors including:

• How much you inherit
• Your current lifestyle including spending and saving needs

In this case, the Reddit poster only ended up receiving $30K and has already spent a good portion of it, while planning to spend even more in the coming days. If he keeps up with his patterns, the money will be gone almost immediately. In fact, he could find himself in a worse situation than before the inheritance if he commits some of the money to lease a truck,  which will come with ongoing payments that he may be unable to afford. 

His quick spending may explain, in part, why he was given conditions to receive a larger inheritance that he was unable to meet, thus losing out on the millions his sisters received.  

Ultimately, the Redditor — and anyone else who receives inherited funds — should think of the money as an opportunity to set them up for a more secure future. This can mean tackling important financial goals like paying off debt, saving for an emergency fund, or investing the money to produce a consistent income stream later.

His sisters, for example, may want to invest their millions and withdraw money slowly at a safe withdrawal rate so the funds provide them with ongoing security.  And, while the poster didn’t receive a fortune, putting his $30K into investments or at least a high-yield savings account could still get him on the path towards more stability especially as he said this is the most money he has ever seen in his life. 

An inheritance can change life for the better — or for the worse 

The question of what to do with inherited funds is something that many people will soon be grappling with. An estimated $84 trillion is expected to change hands by 2045, with a good portion of this money first going to widows before being passed on to children. 

Unfortunately, much of this money may be mismanaged as around 70% of wealthy families lose their money by the second generation and 90% by the third generation. Parents who are handing down assets should make sure they’ve equipped the younger generation with the money management skills needed to use the funds wisely or, as the Redditor’s parents did, may even want to impose conditions before their children inherit to ensure the money isn’t lost quickly if their kids have a proven track record of being irresponsible. 

Those who inherit should also strongly consider talking with a financial advisor before making any large purchases or investments, so they can get the professional advice needed to keep the money safe and use it to improve their lives for the long-term. 

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