The downside of an inheritance

Inheritance, a reward for doing jack squat.

Of all the financial concepts that I have encountered over the last 14 years of my career, there hasn’t been anything that has surprised me more than inheritance. Prior to diving ginger-head first into the financial world, I thought that getting an inheritance was a wonderful positive thing. Um, I’ve never been more wrong in my life. And I’m not even talking about the whole “waiting for someone to die so that you get their money thing”. I already addressed that here.

****Disclaimer. I am not talking about anyone in particular. If you are a client reading this, please know that this isn’t about you specifically. Seriously*******

Inheritance is the great magnifier. It’s like your goofy friend…but when he is intoxicated. He is goofy times ten. An inheritance magnifies your “issues”. If you have shoddy financial habits, then an inheritance isn’t going to fix them. In fact, the inheritance will super-feed your dumb dumb Jones. Are you brilliant and charitable with your money? Great, then an inheritance will just give you more tools to do your thing. But let’s dig deeper, and, of course, get a bit more uncomfortable before we go too much further.

Why does an inheritance exist? Because someone died. My point? You didn’t earn the money. The money has NOTHING to do with you or your decisions. In many instances a sizable inheritance is the result of proper financial planning by the dead person. Now, you can take this disassociation with the earning of this money and run with it in a bad way, or you can allow it to change your life for the positive. But the reality is that you will be using the same brain that got you in your current financial standing in the first place. So be careful.

You would not believe (or maybe you would) how many people I have seen use their inheritance to give themselves a second chance…only to need a third, fourth, and twentieth chance. But the twentieth chance is asked for without access to a chunk of money that wasn’t purposeful in the first place. I guess this is the part of the post where I give you some tips. Okay, here you go.

Consider the following things if you happen to receive money that you never deserved… inheritance.

  1. Save the “he/she would have wanted me to do ____ with the money” crap- Really. While thinking what the deceased would want you to do seems like a reasonable and thoughtful thing to do, it is often used to justified stupid decisions. “Dad would have wanted us to finish the basement.” Really? That’s what Dad would have wanted? I think your dad would rather be alive in your unfinished basement. Yeah, harsh. I know.
  2. Adopt a “preserve the money for future generations” mindset- You got money you didn’t deserve. While it is currently your money, there is nothing wrong with handling it responsibly and growing it for your kids.
  3. Talk to a financial advisor– Most financial advisors will try to talk you out of stupid stuff. They do this for your benefit. You need this sort of person on your side. Employ one.

Feel free to leave a comment and let me know how misguided you think my thoughts are. We learn by discussing, right?

4 thoughts on “The downside of an inheritance

  1. Case-point: A friend of mine’s father died of cancer when my friend was very young (13), he left a small fortune to him (seriously lots of zeros). The catch: he would get the money when he turned 35. Once he was old enough to find out about this, he did nothing with his life, dropped out of school, worked odd jobs to scrap by, because one day he would “hit the lottery,” getting a fortune for doing absolutely nothing. It killed me, because he had the potential to do whatever he wanted with his time but instead became lazy because of a promised inheritance. Is it bad that I secretly hope he got the money, spent it all and is completely screwed now? I guess I’m just bitter because he didn’t work for it. at. all. Inheritances should be treated the same as a work bonus. You don’t stop working or blow all your dough just because you got a hefty Christmas bonus, you know?

  2. You know what really chaps my hide? Kids and their Internet access. And their public school systems. And life-saving healthcare. Oh, and their freedom of speech.

    They didn’t work hard to get any of that. They just INHERITED it from previous generation!

    Everyone ought to start out broke, naked and hungry in an oppressive regime. THAT would be fair.


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