If you’re inheriting $15 million, is it OK to splurge on a $3 million beachside condo? This was a question that one Reddit poster recently asked. The original poster (OP) said that he’s a higher-paid blue-collar worker who doesn’t spend money on much and who has managed to amass around a $1.5 million personal net worth because he keeps his standard of living simple. 

He does love the beach, though, and cruising. And since he’s going to inherit so much money, he wants to spend some of it to buy his own little piece of paradise in the form of a South Florida Beachfront condo. He wanted to know if his fellow Redditors thought the purchase was a reasonable one, though, as he does have two children who will inevitably inherit from him and he wants to make the right moves for them.

So, is his condo splurge OK?

Spending some of an inheritance on something you love is fine — within reason

In this particular case, the Redditor’s poster’s plan to spend $3 million seems relatively reasonable given the amount he’ll be inheriting.

If he pays $3 million in cash for a condo, he’ll be left with $12 million of the inherited funds plus his own $1.5 million. At a safe 3.7% withdrawal rate, he’d be able to generate close to $500K in annual income to spend each year — which is a lot more money than he is likely to need given he’ll have a paid-off place to live and has simple tastes. 

However, it is important for anyone inheriting a large sum of money to:

1. Not rush into making a purchase
2. Understand the long-term costs of the decisions they are making

Data from the National Endowment for Financial Education found that around 70% of people who come into sudden money (from an inheritance or other sources) end up going broke within a few years because they don’t know how to manage the funds effectively and they splurge too much.

While buying a single $3 million condo isn’t going to cause the OP to end up bankrupt, it is important that he maintain his simple lifestyle and not spend too much on everthing.

There’s also the issue of the long-term costs of owning an expensive property, which could include not just maintenance but also things like high property taxes, expensive insurance, and high HOA fees. The OP needs to realize he isn’t just committing to spend $3 million — he’s also committing to paying tens of thousands in extra costs every year for the rest of his life. Making too many commitments like this could start to drain even a big nest egg. 

Finally, some Reddit posters urged him to think about whether he’d actually like the condo lifestyle, cautioning that some people who live in these beachfront condos aren’t necessarily pleasant and warning that the HOA may cause him hassle. 

What should the Reddit poster do?

Ultimately, if the OP can genuinely be happy with his single splurge while keeping his other spending in check, and if he’s confident he’s found a condo he will love, then he can probably go ahead and make the purchase — after carefully researching ongoing long-term costs.  Talking to a financial advisor to make a financial plan that includes the condo may also be smart. 

However, to make sure the condo life is for him, he may want to try renting for a brief time to see if he enjoys the lifestyle once it becomes a reality or if buying a beachfront property like this ends up being something that looks better on paper. 

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