The Bible states:
A good person leaves an inheritance for their children’s children, but a sinner’s wealth is stored up for the righteous. – Proverbs 13:22 NIV
We must note that some “good” people, due to unforeseen circumstances, will not be able to leave a financial inheritance to their children. But, a good person will leave some type of good inheritance, because their example will live on in the hearts of their family.
What if, though, a financial inheritance comes your way? Often, these are fairly significant amounts of money. Possibly a few thousand dollars, or maybe even significantly more. What should be done with that money?
2 Guiding Principles
Different experts are going to give different answers, of course, but two principles need to guide us no matter our circumstances.
First, this is still money that we are managing for God. We are stewards of any financial blessing that comes into our lives, even if it comes to us through the death of a loved one. We must still seek the wisdom of the Lord in how to handle this money.
Second, the money needs to be used in a way that honors the giver. Sometimes, the person will state how the money is to be used (pay for college, pay off debt, go on a vacation, etc.) but more often than not, it is left up to the receiver’s discretion. However, we need to consider the one who blessed us with this money. If they were known for saving money, it would probably not honor the giver to just blow it all on a huge “all out” vacation.
5 Things to Keep in Mind
With those two principles in mind, here are some things to consider when deciding what to do with an inheritance.
1. Complete a financial goal.
Would this one windfall finish off your emergency fund? Would it pay off all your debt (or a significant debt)? Would it help you build a very strong down payment for a house? While Dave Ramsey would walk his followers up the “Baby Steps,” I would deviate slightly from that if there were one significant goal that could be completely met by this one gift.
2. Don’t make a snap decision.
This is especially true if you were very close to the person who has died, and your emotions are still a bit on edge. It is easy to invest or spend even a significant amount of money right away, and then realize your mistake. Take a little time to grieve. Park the money in something very safe until your emotions are more stable.
3. If the money is very significant, do a couple of things.
If you are doing okay financially, and the money you are getting is a large amount, it is fine to allocate some to several different things. Maybe you max out a Roth IRA and buy a motorcycle, for example. You probably don’t want to spread yourself too thin, but it is fine to think of a few areas where the money could be helpful and allocate accordingly.
4. Get help.
This is, literally, a one-time decision. Should you invest? Pay off debt? Build up savings? Go on a cruise? Make sure you get help from people who are wanting to really help – as opposed to just collecting a commission check! Most financial coaches with good hearts have helped people in similar situations before, and would be glad to help you really think about the situation, not just the money.
This must be included, because God provides wisdom to those who seek it, and the decisions made with this money must be wise decisions. Even if you choose to spend the money (and, often, that would honor the giver), you can be at peace with that decision if you have sought good counsel and spent time with the Lord in prayer.
As one final “tip,” I would add this: Any time we receive an inheritance, it should open our eyes to how that gift has blessed our lives. That should, in turn, provide us motivation to bless those we love, if at all possible, when the time comes for us to pass into eternity.
What is something wise you have done with inheritance money? Leave some ideas for others in the comments!