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Ask Dave

Keeping The Family And The Money Safe

Henry is helping a young widow do well with her insurance money. Dave wants her to be aware of some trappings, including grief spending.

QUESTION: Henry is a casualty assistance officer who has a client who lost her husband in Iraq. She will get $500,000 in insurance money, and he asks Dave what he can tell her to make it last. She is in her mid-20s and has a 15-month-old son. Dave tells him what to look out for, both outside forces and in.

ANSWER: I have spoken to many spouses who have lost spouses in a time of war. The first thing they need to be careful of is to look out for the vultures. There are not only financial people trying to sell them a bunch of crap, or family members who say they want to help and give their help by taking the money. Be aware of dangerous guys that start to look like boyfriends. I’ve sadly heard lots of stories of young women who were left money and it got extracted by some vultures. They need to be very careful and develop their own mind about this.

Also, look out for grief-based spending, where they spend money to medicate themselves and feel better. They think it will be better when they buy themselves a new car or dress, but none of that works to help the grief. It destroys the finances and creates a lot of regret later.

Walk her right up the Baby Steps, getting her out of debt and an emergency fund, and have her write a check for a house. Do some long-term investing for her and the child.