When someone receives an inheritance, especially an unanticipated one, it might leave them feeling quite overwhelmed by their new found options. Ideally, the lump sum should bring them closer to being financially independent, but countless heirs don’t know how to handle such a copious amount and end up no better off than they were before. I know you’re thinking “How could someone get so much money and don’t do anything of importance with it??”.. Well do I have some stories for you!
The names of the people whose stories that we’re about to tell you about, were changed to protect their identities.
Bob C. Inheritance:$100,000+
When Bob turned 18, he received an inheritance from his Father that passed away when he was younger, of over $100,000. Now there aren’t many 18 year olds walking around with this type of money so immediately Bob felt like he was on top of the world. With no financial training, and no plans after high school Bob had all the time in the world to decide what he was going to do with the new life he inherited. He bought a low rider truck and fully tricked it out, He enrolled himself in school and paid for half in cash and got a loan for the other half, he quit his job, thinking once he was done with school he was going to be a famous music producer, he bought his mom a car, spent thousands at Abercrombie, he ate out constantly, etc. Out of all of that and then some, the most important thing he paid for was his school tuition and the tricked out truck because that’s how he met his wife(they’re still together, by the way. Before he knew it he was on his last thousand, wondering “where did all my money go?” There was $35,000 that he couldn’t even figure out where it went. Now it sickens him to think about the money that slipped through his fingers but he learned a very valuable lesson in the process “never give money to kids who doesn’t know what to do with it, they couldn’t manage their money before, and now they have a lot more money to mismanage”.
Linda T. Inheritance: $66,000+
When Linda was 22 she received an major, unexpected, inheritance from her step-grandfather. Her dad immediately took her to the bank and helped her open a CD, which is a deposit account with a high interest rate. She deposited $61,000 in the account and put the other $5000 in her checking account. At first she started out slow, only buying a Nikon Camera to help her take pictures for a her blog. After a while though, the money began to burn a hole in her pocket. She started spending it on high quality clothes for her fashion blog, home decor, headbands, jewelry, at that time she felt like she had a never ending flow of money. So basically anything she wanted, she bought. She was constantly withdrawing money from her CD, to the point she felt so guilty she would make up excuses to tell the banker such as “I’ve had a lot of medical problems recently” or “My dog needs to have surgery”(even though she never owned a dog in her life). She became obsessive about shopping, and felt that new things would solve all of her problems. After a year, she was down to her last few hundred. The only thing she had to show from her inheritance was a credit card with a $7000 balance on it, a fixed car(thanks to the Nikon camera she had to pawn), and all the clothes she bought, which unfortunately were no longer in style. Now she is back to where she started, with a little more debt and a new look on life.
So for those of you that are expecting an inheritance, a buck is still a buck, whether you or your beneficiary earned it. So before rushing to buy a flat-screen television or invest in the latest stock, develop a game plan, stick to it and you will be thanking yourself later.