Receiving inheritance money seems like it would involve a gumbo of emotions. For one, you’ve somewhat unexpectedly been graced with a financial come-up. But you’ve also likely lost someone close to you, which can make the gift bittersweet. Sometimes, you barely know the person who thought of you specifically when they left you a chunk of money or their worldly possessions. We’re not, in any way, pitying people who have the luck of getting a chunk of money they didn’t work for — but it does feel like a lot to process. And I can’t speak for everyone, but I don’t know responsibly I’d handle that.
For those who aren’t great with money, receiving a sizable amount of it with no restrictions can get messy. In a 2015 study of “financially distressed” people in Florida who had won the lottery, they found that within three to five years, the winners of big prizes had filed for bankruptcy.
While it feels like inheritance is a topic only relevant to a tiny percentage of privileged people, it’s projected that 40% of millennials will actually get one someday. With that in mind, we interview three people who inherited a large amount of money when they were in their 20s (or younger) about what they did with it.
Peter Welch, Brooklyn, NY
I received more than one inheritance. However, since I’m bad with money, my parents managed two of them for me. The first one I received a few years ago, when my grandmother died, was about $5,000. My parents decided it would be best if they just paid my school loans with it and that’s what they did, so I never even saw it. Never touched my account. But it did change my life, a little.
My parents are quite dedicated to running my finances — actuarial tables and the like — since I am really, really bad with money. My second inheritance (which was bigger than the first) came when my parents, who planned on leaving us money when they pass, decided to give it to us while they’re still alive. So, both my brother and I got about 50,000, staggered over a few years.
My brother, who is much more responsible with money than I am, used that to start paying for a new house. I used it to move into a better apartment, kind of quickly because the apartment I was living in at the time left much to be desired. Now I have a backyard, which in Brooklyn is just spectacular. Especially now when we’re stuck at home.
I also bought stocks using some of the money. One of those companies was Etsy, so obviously, I’m keeping the money invested in them for now. The one extravagant thing I did, however, was spend a good fifth of the money on a trip to Japan. Like, as soon as the money became available, I immediately flew to Japan and blew $10,000 on that trip. But, I’ll remember what I did there for the rest of my life. It was totally worth it.
After all that, my advice is: If you come into an inheritance and were planning on a big change or needed to cover an expense and, spend it on that. Otherwise, stash the money. (This advice is for medium-ish inheritances. if you inherit the crown, throw your work phone in the trash and buy an island.)
Heather Cooper, Washington D.C.
I was only three when my maternal grandfather died. He left some money to each of his children, and grandchildren, divided equally. There was also money added to that that came from the other side of my family, so I was never totally sure of the total I ended up with.
Obviously, it wasn’t something I could run out and spend as a toddler, so my parents managed it. But I still basically manage it to the day even though I’m in my 30s. I just grew up being told it could help with college, emergencies, and whatever came up.
I first touched the money to buy my condo when I turned 20. My grandmother helped pay for it, and the rest of it was paid out of the money that my grandfather left me. I will likely have just enough to have some leftover to leave to my children if I’m responsible with [the inheritance money].
I met my husband that same year, so I went from a single 20-year-old with no house and no car to a married woman with a condo almost instantly. My parents also received money from my grandfather’s estate, so they also give me money every year from that amount. It’s incredibly complex.
Even when my salary was less than $30k per year, I was able to live off of it and also save [because of the inheritance money]. That said, while it would be enough to pay for a deposit on a 3-bedroom where my husband, children and I currently live, our salaries are such that the mortgage would be really stretched and it would wipe out the brunt of our savings. So while it’s a substantial sum, it’s not like it’s enough to pay for anything we might possibly want.
If I had suddenly inherited money in my 20s, as opposed to knowing that I had it my entire life, I’d have been pretty private about it and hesitant to tell others or display wealth. I wouldn’t go on a lavish vacation or anything.
I was once open about my money with a guy I dated in college. And somehow, he would always, always forget his wallet wherever we went. I finally caught on after he did this four dates in a row, and I broke up with him. My advice is that if you tell somebody about your inheritance, make sure you trust them to not take advantage of you.
Carly Mitchell, Cupertino, CA
I grew up knowing that I had a trust fund, but I wouldn’t have access to it until I became an adult. My grandfather, who was in the foreign service, passed away when I was 19, but had been putting away money for his grandchildren for pretty much his entire career.
Growing up, I was always told I would receive a lot of money when I turned 18 and that I should use it for college. But by the time I turned 18, the adults – my mother, my uncles, and grandmother — started telling everyone that the money should be saved for a house. But I was young, so I used it for school, and for myself. I’m a generous person at heart, so I spent it on my friends as well.
Having that money allowed me to take my time with college — six years of classes spread out at a pace that I found comfortable for me. I was also able to afford a one-bedroom apartment by myself in downtown Baltimore. If I didn’t have that money, I would probably have been in a dorm and met new people. I had a few friends in college but for the most part I kept to myself, and by the time I graduated from college I had spent my entire trust.
In contrast, my cousin, who also got inheritance money, did the opposite of what I did. He saved some of his money and invested another part; before we received the money, it was invested in science and technology stock, so he just kept it there and grew it. He was then able to buy a really nice house in the suburbs.
To be honest, if I had not gotten my inheritance, I probably would have accomplished more and developed a sense of responsibility much earlier. I had a safety net. It wasn't until I got married and my husband would call me out on my spending habits that I felt like I developed an “adult” sense of money.