How I Plan to Protect My Kids’ $20,000 Inheritance from Inflation and Overspending

Coming into a large sum of money is generally considered to be a good thing. The problem, though, is that some people who inherit money don’t know what to do with it. And for this reason, they risk blowing through it all too quickly.

In this Reddit post, we have someone whose adult children were left $20,000 each. But they’re worried that the money is slowly disappearing as a result of their children’s spending.

The poster would like to see their children use the money more responsibly.

Ultimately, because the children are adults, the poster may not have any say as to how the money is spent. But there are some potentially helpful things the poster can do to help their children make the most of those funds.

It’s all about having the right conversations

Children don’t tend to enjoy being told what to do. This holds true for young children as well as adult ones.

The poster here is in a tough spot because if they seem too intrusive, their children may not be willing to listen to their advice. So instead, what the poster may want to do is sit her grown kids down to have a talk and approach the topic in a non-judgmental fashion.

The poster can say that they’d like to see the kids use at least some of the money to secure their future. To that end, the poster can recommend using a portion of the money to:

• Build an emergency fund
• Pay off expensive debt, like credit card balances
• Start a retirement savings account
• Invest in a brokerage account
• Save for an important goal like buying a house

Beyond that, if the poster knows anything about investing, they can explain different options to their children. For new investors, broad market ETFs are often a good bet. They offer instant diversification without a lot of research.

To be clear, the children can and should prioritize whichever goals are most important and applicable to them.

If they have no emergency fund at all, they should put some money into a savings account before moving onto an IRA. If they owe thousands of dollars on credit cards charging 20% interest or more, that debt may be worth tackling first.

But the poster, when talking to their children, should acknowledge that it’s okay to use some of their inheritance for fun purposes. If they try to make their children feel bad about using a portion of the money for their own enjoyment, they could end up alienating them — at least within the context of this conversation.

A financial advisor may also be able to help

Sometimes, it’s best for parents to stay out of their kids’ financial business and leave things to the professionals. To this end, the poster may want to set their children up with a financial advisor in light of their recent windfall.

A financial advisor can review their situations and goals to offer guidance on how to use the money. An advisor can also set the poster’s children up with strategic investments so that they’re able to grow the funds they aren’t spending right away.

The post How I Plan to Protect My Kids’ $20,000 Inheritance from Inflation and Overspending appeared first on 24/7 Wall St..