Personal Finance

19-year-old calls Dave Ramsey to tell him he inherited $100k and doesn't want to blow it

Joel South

Published: January 31, 2025 2:35 pm

After years of pandemic-fueled high inflation rates, $100,000 ain’t what it used to be. For a 19-year-old college student, though, it’s still a lot of money to inherit.

So when “John,” a college junior majoring in Marketing at a small college in South Carolina, learned a few years back that he had inherited $100,000 from his grandfather’s will, his first instinct wasn’t to spend all the money on new cars and fancy vacations with his friends. It was to call in to The Dave Ramsey Show, and ask for some advice to make sure he does not “blow this opportunity.”

Almost line for line, Ramsey gave John the exact same advice I would give. Almost line for line.

First things first: Pay your debts

Keying off of John’s status as a college student, Ramsey’s first suggestion was to pay off college loans, and then proceed to pay the remainder of his education costs in cash. John confirmed this would leave him with about $80,000 remaining by the time he graduated.

Continuing to give the same standard financial advice most money advisors would give, Ramsey next suggested calculating John’s average monthly expenditures, and putting three months’ expenses aside in an emergency fund, which money would remain untouchable except at great need.

Ramsey didn’t go into too much additional detail after that, suggesting only that John leave the balance of his inheritance untouched and “pretend it isn’t there” until completing a reputable consumer finance course that would teach him how to manage his money competently, which also seems like sound advice to me.

Big picture, Ramsey’s advice is that, when you receive an inheritance, think about what you can do with that money that would make your benefactor proud. Would it make grandad proud to see you fritter away your inheritance, buying “something stupid” or giving away money “to your crazy cousin?”

Then don’t do that. If you treat an inheritance (or a lottery payout, or any financial windfall) like monopoly money, “you will be shocked at how fast it will leave you,” warns Ramsey. And all you’ll have left is “a lifetime of regret.”

Rather, treat the money like you’re holding it in trust for the person who gifted it to you. Because in a sense, that’s what you are doing. Someone worked hard for that money. They’ve entrusted it to you to do something responsible with it, and failing to do that would be a breach of that trust.

Being responsible needn’t be no fun

Now, this isn’t to say that John can’t have any fun at all with the money. Again, this money is a gift, and I expect grandad wanted it to bring some joy to John. So how can he do that, while also treating the money responsibly?

As I suggested above, I think Ramsey’s advice is by and large the right advice. Pay off debt now, and you won’t have to pay it off later, and you’ll also not have to pay interest on that debt. Use the money to invest in your education, an asset that can never be taken away from you. And for any money left over, put it in a safe place until you have a good plan for how to invest it.

Placed in a bank account at today’s average savings rate of 0.5%, the $80,000 John will have left over after paying off his college loans and paying tuition through graduation should yield a “free” $400 a year in interest income, which is enough money to dine out at nice restaurants a few times a year. Many banks pay more than the average, however. In fact, according to Bankrate.com, you can still find several banks paying close to 5% interest these days if you look. That’s enough to generate nearly four thousand dollars in annual interest, and probably pay for a nice vacation or two.

Financial advisors may be able to offer even better options. But to my mind, if John simply takes Ramsey’s advice, and puts his money in a savings account until he has a better handle on what to do with it, that one single money move should be enough to both preserve his inheritance, and give him a little extra fun money to enjoy while he works things out.

And I’ll bet seeing that would make grandad very happy indeed.