Personal Finance

I'm 19 and getting $2 million from my grandfather and Dave Ramsey has an important warning for me

Christy Bieber

Published: January 26, 2025 7:57 am

Inheriting $2 million is a blessing, but it can also leave you feeling very overwhelmed — especially if you are only 19-years-old when the money comes.

This is the situation that a man named Jerraud is facing. Jerraud called into the Dave Ramsey show for advice after his grandfather’s death, as he was on track to receive around $2 million once the family farm was sold. 

Ramsey had some very blunt advice for the young beneficiary, including one crucial warning that everyone should hear — even if they don’t get a multi-million dollar inheritance. 

This warning from Dave Ramsey is very valuable advice

As soon as he heard Jerraud’s story, Ramsey had a clear warning to deliver. 

“Keep living your life like a 19-year-old, think about investing, maybe enjoying a tiny amount of the money, because once you start spending it’s a thread on a sweater and you’re going to unravel the whole thing,” Ramsey said. “Spending is your enemy.” 

Ramsey is absolutely right that those who inherit can end up spending far too much and jeopardizing the financial security that their inheritance should provide.  In fact, studies have repeatedly shown that it’s rare for inherited money to actually last.  For example, research from the Williams Group showed that 70% of well-to-do families lose their wealth by the second generation and nine out of 10 lose all of it by the third generation. Another study based on data from the Federal Reserve and Bureau of Labor Statistics found that a third of people who inherit have negative savings within two years. 

The problem is that many people who inherit drastically upscale their lifestyle without thinking about the ongoing impact of their choices. For example, someone who gets $1 million may buy a big house, forgetting about the annual property taxes and high insurance costs they’ll have to pay which can quickly drain their nest egg. 

Ramsey has suggested that Jerraud can enjoy this fate by avoiding the type of lifestyle changes that will make the funds disappear. “You need to be on a budget, you need to be working and have a career, you support yourself,  and you leave this money alone,” Ramsey said. “You let it grow, you give it, you invest it, and you enjoy a tiny percentage of it.” 

What should you do with a large inheritance?

In addition to warning Jerraud about the dangers of spending his money, Ramsey also had some suggestions about what to do with it instead. Specifically, he wants Jerraud to invest — but with an important caveat. Ramsey also warned that Jerraud should never invest in anything he does not personally understand. This rule applies both now when he is young and for the rest of his life.

Ramsey suggested that the young heir keep things simple with his investments at this point since he isn’t yet comfortable with having a lot of wealth. However, he also said that Jerraud should build a team of advisors including a financial advisor, a tax professional, an insurance professional, and a lawyer. If Jerraud can find people who he trusts, he can learn more and choose more sophisticated investments while still keeping in mind the rule that he should not invest in things he doesn’t fully comprehend.

Ramsey’s advice is good for those who inherit, but it’s also helpful for everyone. No one should spend so much that they can’t maintain their lifestyle and no one should invest in things without understanding them. By keeping these rules in mind, Jerraud, other heirs, and anyone deciding what to do with their money can avoid common pitfalls and stay on the path toward a successful future.