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Ask Dave

She Inherited A Million

Arthur is concerned because his fianc?e has inherited more than $1 million from her father and wants to know how he can best help her decide what to do with the money.

QUESTION: Arthur in South Carolina is concerned because his fiancée has inherited more than $1 million from her father. Arthur wants to know how he can best help her decide what to do with the money. Dave recommends treading lightly and slowly on this one.

ANSWER: The first thing you need to do is go slowly because while you do want to lead in this relationship, you need to remember true leadership is servanthood. Real leaders are servants. What you're doing when you're leading in a relationship is you're serving. How can you best serve her?

You go slowly, because if you've suddenly become bossy to money that came out of her family, that's going to be very hard for her emotionally to swallow and for others around watching—like her mom or brother or sister or whatever. The decisions need to be made gently, and she needs to be very involved in the decisions, very vocal with her opinion. She doesn't need to "turn it over to you." Don’t allow her to do that even if she wants to. She needs to be very involved in the decisions. You can come up with ideas and options and lay them on the table. You can meet with an investment counselor and get trained in what you're doing. She can't just say, "Whatever you want to do, honey."

You both need to ask yourselves since he was a person who was wise with money, "Is the decision that we're making something that is honoring to Dad's memory?" I can tell you going and buying a new Learjet and spending $1.2 million on it would not be a decision that's honoring to his memory. It's not how he lived. It would be ludicrous to spend your entire fortune on a jet and 100% o your net worth in a jet, as an example.

Once we've put those things in place, then mechanically, what are we going to do with the money? We're going to walk you through the Baby Steps and, as you said, you are out of debt. You have your emergency fund in place. I would rent an inexpensive apartment for a year. During that year, get to know each other, get comfortable with handling money and life together, and somewhere during that year when you both feel comfortable with the idea, write a check and pay off the student loans. Then we start thinking about what kind of a home we can buy and pay cash for it. And then we take a house payment that every other couple your age is used to making and start paying that to yourselves into a mutual fund. Then you're probably about done then. If you need to move up a little in car or give some or do some other things, you can begin to talk about it.

But just move slowly with your other investments. You're being very wise. I love that you said you're going to wait a year to buy a house. A lot of people rush out and buy something right now. You're going to shop around and pay cash and get a great deal. You're doing really smart stuff.