Photo: Marc Royce
Q: As an only child, I'm about to come into a large inheritance. I'm a teacher, and the money (and the interest it generates) could support me for the rest of my life. My difficulty lies in the guilt and confusion associated with this windfall. I feel terrible when I hear colleagues stressing over their finances, saving every last penny for a down payment or wishing they could win the lottery. I'm secretly jealous of them and want to lead a normal life. I have entertained thoughts of buying a house, but I'm too nervous to live lavishly and I worry about how it would make my friends feel. What should I do?
A: You may be a teacher, but you're in serious need of a financial education. I understand that you're concerned about how to deal with this newfound wealth, but you seem to think that it's wrong to have money, that it's more righteous to struggle. How much you have in your bank account doesn't define whether your life is normal. Your happiness comes from how you handle what you've got.
Your first job is to consider what an amazing opportunity you're being given. Who worked so hard to amass all that wealth? You have a responsibility to honor, not diminish, what your family created for you. Next I want you to buy a home you're comfortable living in—not the mansion you can probably afford, but the house you need. Pay for it up front in cash. I've seen too many women who, out of guilt and shame like yours, went through millions of dollars of inherited wealth and have nothing to show for it. Given your concerns, I don't expect that to happen to you. But rich or not, one of the best moves any woman can make as she gets older is to own her home outright.
I also want you to pay off any other debts you may have, such as student loans and car payments. Then donate a respectable portion of what you inherited to a charity. It's always important to give back when we receive. Each year, continue to donate at least 10 percent of your income—what you make as a teacher plus the earnings generated from safely investing the remainder of your inheritance. And share the news of your good fortune. True friends will be thrilled for you. This bequest gives you what so many others can only hope for: the ability to take care of yourself no matter what. Please don't see your financial freedom as a burden. Make the most of it.