Teaching a grand lesson
Question: Nick's sister just died, and he's the estate executor. She left $100,000 for her son, who is Nick's nephew. He is 16 years old. What is the best way to use the money, and what does Dave say about introducing him to Dave's material?
Dave Ramsey's advice: Lots of 16-year-old kids go through Financial Peace University, but that's based on them having a mindset of them wanting to go through and want to learn that stuff. We have teen-based materials like Financial Peace for the Next Generation that would probably do better for him.
As far as what to do with the money, it depends on what his plans are. If he's going to college in the next couple of years, we won't invest the money in the stock market because it's going bananas. We don't invest in the stock market in the first place. If he's going to college, I'd take the unused portion of the money and put it in good growth-stock mutual funds.
A 16-year-old will think that $100,000 is a lot of money, but it's not. Talk to him about how this isn't a lot of money, and that it's both a blessing and a tremendous responsibility to honor the legacy of his mom and do good with this money.
If he's going to college, the nephew shouldn't be given the money to pay for it, Nick should pay the school directly. That way he won't blow it all. It's like offering to take a homeless person to lunch instead of giving them money for lunch...9 times out of 10 they suddenly have something else they need the money for.