• Skip to primary navigation
  • Skip to main content
  • Skip to primary sidebar

Wealth Pilgrim

No Money Worries. No Matter What.

Neal Frankle featured in
  • Home
  • Life Insurance
  • Investing
    • Build Strong Investment Building Blocks To Avoid Going Broke In Retirement
    • Systematic Mutual Fund and ETF Investing
    • Stock Market Investing Guide
    • Choosing the Right Investment Brokerage Guide
    • How Bonds Work Guide
    • How Banks Really Work Guide
    • Annuities – What You Need To Know Before You Invest
    • A Beginners Guide To Buying Individual Stocks
    • Create A Pool Of Great Mutual Funds and ETFs To Pick From To Secure Your Retirement
    • ETF and Index Fund Investment Guide
  • Earn More
  • Banking
  • Retirement Planning
    • Retirement Guide
  • Ask Neal a Question
  • Reviews
    • Upgrade Personal Loans Review
    • Lending Club Review
    • Prosper Review
    • Ally Invest TradeKing Review
    • CIT Bank Review
    • LegalZoom Review
    • Lexington Law Review
    • Airbnb Host Review
    • Should You Drive For Uber?
  • Tax
  • Courses
    • Raise Your Credit Score So You Can Buy a House – Free Video Course

What You Should Do With Inheritance Money

by Neal Frankle, CFP ®, The article represents the author's opinion. This post may contain affiliate links. Please read our disclosure for more info.

Do you know what to do with inheritance money or any other windfall? I received a question like that from Nancy a few weeks ago. Here’s the situation.

Nancy and Jim are both 31. They have two small children. They rent an apartment and have almost no debt. When Jim’s great-aunt passed away, they inherited $350,000. Jim asked me what he should do with the inheritance money.

Before I could answer Jim and Nancy, I had to learn more about them. They were considering buying a home and/or a business. Nancy was a stay-at-home mom. Jim had a stable job, but his income was modest. They were just able to squeak by with the money he brought home. They looked into buying a few different business franchises. They were also interested in setting up some retirement accounts and putting some aside for the kids’ college. What would you suggest they do?

My first piece of advice was for Jim to buy some term life insurance. Since Jim was the only current wage earner, the family simply had to buy enough life insurance on him before doing anything else.

Next, we all agreed that the big issue was income. This wonderful couple wasn’t spending too much – they simply weren’t earning enough. They already realized this but it was important to call it out. While l loved the idea of buying a home, I suggested that they wait. They first needed to increase their income before taking on more financial obligations.

If Jim were to lose his job and they had a mortgage, real estate taxes and insurance payments to make, they took a real chance of losing everything. On top of that, they had a bankruptcy a few years ago and didn’t have a high enough credit score to get a mortgage.

Jim and Nancy were thinking of buying a business. They asked me what I thought of two different franchise ideas. I told them I could evaluate them, but I’d have to charge them for my time. A better idea would be for them to do lots of investigation on their own and then go to small business people they knew who were successful and talk the ideas over with them. That is the very best way to get a well-rounded objective evaluation. Also, since the couple didn’t have a lot of small business experience, I wanted them to take this step very slowly and think it all through very carefully.

I suggested that they put $75,000 aside for a business and the rest to be invested very conservatively. I told them that once they either have a side income or business income coming in (over and above what Jim brought home), they could use the balance of the inheritance to buy a home. Since it might take them a couple of years to ramp up their business, the money should be invested very conservatively.

Jim and Nancy seemed very satisfied with this game plan. What would your suggestions be? What different advice would you offer? If you have received an inheritance, what did you do with it?

Tweet
Pin
Share

Reader Interactions

User Generated Content (UGC) Disclosure: Please note that the opinions of the commenters are not necessarily the opinions of this site.

Comments

  1. Tim says

    December 21, 2011 at 11:23 AM

    In what part of the country do they live? There are great deals on houses- If they do the work and aren’t too picky they could likely find a livable house for under $100k. Pay cash and don’t worry about getting a mortgage.

    If I were Jim and Nancy I’d worry about inflation. A lot.

    Reply

Leave a Reply Cancel reply

Your email address will not be published. Required fields are marked *

Are You Human? * Time limit is exhausted. Please reload CAPTCHA.

Primary Sidebar

Who is Neal Frankle

Neal Frankle

I'm a CERTIFIED FINANCIAL PLANNER™ Professional with more than 25 years of experience. I feel very blessed and hope to share my personal financial experience and professional wisdom with readers of WealthPilgrim.
Read More »

Stay Connected

Facebook Twitter YouTube RSS

More Categories

Career Development
College Funding
Credit Cards
Credit Score Fixes
Money and Marriage
Debt Relief
Estate Protection
Property Investment Loans
Small Business Strategies
Spend Less Money

Disclaimer

Wealth Pilgrim is not responsible for and does not endorse any advertising, products or resource available from advertisements on this website. Wealth Pilgrim receives compensation from Google for advertising space on this website, but does not control the advertising selection or content. Please do the appropriate research before participating in any third party offers. The information contained in WealthPilgrim.com is for general information or entertainment purposes only and does not constitute professional financial advice. Please contact an independent financial professional for advice regarding your specific situation. Wealth Pilgrim does not provide investment advisory services and is not a registered investment adviser. Neal may provide advisory services through Wealth Resources Group, a registered investment adviser. Wealth Pilgrim and Wealth Resources Group are affiliated companies. In accordance with FTC guidelines, we state that we have a financial relationship with some of the companies mentioned in this website. This may include receiving payments,access to free products and services for product and service reviews and giveaways. Any references to third party products, rates, or websites are subject to change without notice. We do our best to maintain current information, but due to the rapidly changing environment, some information may have changed since it was published. Please do the appropriate research before participating in any third party offers.


About · Contact · Disclaimer & Privacy policy

Copyright © Wealth Pilgrim 2022 All Rights Reserved