One of the most challenging financial situations, aside from a massive lottery windfall, is determining the best way to handle an inheritance. It doesn’t even matter how much money is at risk, as it stands to reason that there is a desire to make sure this money isn’t lost in a hurry.
This is precisely the situation with one Redditor posting in r/inheritance, who is under 16 years old and recently inherited approximately $500,000 after the death of their father. On the plus side, this money is life-changing, but on the other hand, it can bring about a whole new level of stress.
What Not to Do With an Inheritance
There is no easy way to say it, but receiving an inheritance is both a blessing and a curse. Before we dive into how to avoid losing it all, let’s cover a few critical tips that will help you keep your sanity and protect yourself from others taking advantage.
Stay In School
Just as I would say to anyone else who is currently working and receiving an inheritance, the best advice I could give is not to quit school. Look, receiving $500,000 is a life-changing amount, but it’s not enough to retire early, and it’s certainly no reason to take time off from school. Thankfully, it feels like this Redditor has a good head on their shoulders, at least as far as education is concerned.
Don’t Spend Without Planning
Another piece of advice I’d give a friend in this position is to avoid spending without a plan. If you want to grab a nice dinner, that’s a much different story than going out and buying an expensive car with cash or taking a summer off to travel Europe. These are very difficult discussions, but if this Redditor wants to make any big expenses, I would tell them to stop, think, and then act.
Don’t Tell Anyone
This is going to be the most important advice anyone can give this Redditor in the comment section of this post, and that is to tell no one. If they are not your family, who are already aware of this inheritance, they don’t need to know. Unless there is a spouse involved at a later age, I would absolutely recommend keeping quiet; otherwise, friends will come out of the woodwork begging for help or to give you great investment opportunities that are “sure things.”
What The Redditor Should Do Right Away
Meet With a Financial Planner
It’s important to caveat here that this Redditor should be meeting with a fiduciary financial planner, who is legally bound to give them advice that will benefit them. This is the biggest thing I would mention, as the Redditor absolutely needs someone who can provide them with the right investment advice and set up a strategy for growing this money.
Avoid Unnecessary Spending
As I mentioned earlier, this Redditor, like anyone else in my life who has received money, should avoid unnecessary spending. I would encourage this right from the get-go and let them know that this is the quickest way to lose everything from the inheritance without having anything to show for it.
Live Within Your Means
Piggybacking on the above advice, this Redditor needs to remember that while they are in school and not making a full-time salary, they should live within their means. Their father would not want them to squander this inheritance on luxury purchases, so this individual should rely on help from other family members, at least until they are 18 and able to go off into the world, start college, and work their way toward a full-time salary.
Don’t Let Anyone Control the Money
Because of the Redditor’s young age, they are already in a position where other people are taking control of the money. They should consider investing some of the money in a high-yield savings account. It’s also important to remember that the lawyers assisting with this matter work for your benefit. So far, they (the lawyers) structured the payouts, which is okay, but they should really consider working as soon as they turn 18 to take control of this money and restructure how it’s set up so it can be spent in a different way.
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