I’ve been recently having a conversation with a reader in his 30s who just inherited $650,000 from his parents who recently passed away. By his own admission, he’s lived paycheck to paycheck his whole life (sometimes out of necessity, and sometimes out of lifestyle inflation) and so the prospect of having a nice bit of walking around money is new to him.
Our conversation covered the bases you’d expect—the wisdom of paying down student loan debt at a 3-4% rate, the prospect of buying a home in cash, investing at market highs, etc. Probably nothing new to the readers here.
But my conversation with him also had an additional moral element: he felt guilty about unearned wealth. He didn’t have $650,000 coming his way because he saved it up, made intelligent investments, or even collect a lottery winning. It was all the result of someone else’s efforts, and he wasn’t sure how he felt about that fact.
The source of the guilt is understandable, even if you don’t ultimately agree it is unwarranted—a huge, fantastic blessing came his way that was purely the result of his birth, and he did nothing directly to be worthy of such a blessing.
Here’s how I worked through the dilemma:
Many things in our lives are the result of luck, and I define luck to mean “random events” that are not the result of our purposeful actions.
We don’t control the family into which we are born. I’ve never met a first-grader that got to decide what elementary school he attended. You can’t control whether you’re good looking or have a face for radio. You can’t control whether you’ll be born fully healthy, or with severe medical conditions that will stick with you the rest of your life. You can’t control whether you can be the kid that knows everything without trying, or whether you’ll have to work 200% harder than everyone else.
A substantial portion of the good things we have in life are the result of random events, and a substantial portion of the bad things we have in life are the result of random events.
But that does not mean we are powerless—every set of circumstances that we inherit also comes with a range of possibilities that we can fully control. If someone is born good-looking, they can cede that advantage if they neglect exercising and anything resembling nutritional health. Likewise, someone that exercises two hours per day and practices great hygiene can end up getting more glances than the person born more attractive.
It applies to intellectual endeavors as well. I’ve seen countless people in college and graduate school that don’t possess remarkable intelligence receive honors and accolades because they live in the library and work harder than just about anyone else. A persevering ethic—whether it be in maintaining a relationship, pursuing an intellectual endeavor, staying in physical shape, etc.—is more important than almost anything else. That is the great neutralizer. If you possess a relentless—almost defiant—spirit, you can overcome almost everything else. If I had the choice to go through life with a $2.5 million trust and a so-so work ethic or absolutely no money and an insatiable appetite to be my best, I’d absolutely pick the latter.
I mention all of this as a long-winded preface to answering the question about the morality of inheriting money for one reason: our ultimate success will not be judged by getting the circumstances that we desire, but rather, by reacting intelligently to the circumstances that do present themselves.
What is the major implication of that sentence?
When good fortune comes our way, it our job to leverage that good fortune into the best advantages and benefits (to ourselves, and in some cases, to society) that we can, otherwise we are leaving potential on the table.
When bad fortune comes our way, it is our job to minimize that bad fortune so that it does the least amount of damage to us personally, otherwise we are going to let it limit our potential.
With that framework in mind, we can get to the meat and potatoes of the question: Should you feel guilty about inheriting a large sum of money?
My short answer is no. Look, I’m Catholic, so guilt is a language I’m damn near fluent in, but there is no reason to feel guilty about anything unless you act directly or indirectly to cause harm to others while trying to benefit yourself (lying, cheating, and stealing cover a lot of the bases in this regard).
Surely you would agree with me that your deceased parents possessed the right to do with their money as they desired. After all, it represented all of their claim checks on society that they acquired on this earth—the difference between what they gave the world and what they took from the world, economically speaking—and out of the countless millions of possibilities dictating what they could have possibly done with the money, they chose to give it to you.
Respect their autonomy to make that decision. They wanted you to have that wealth. Instead of feeling guilt and bad emotions for the windfall that has come your way, this should be a time to get excited. You now have an opportunity. You now have a duty to prove your parents right for giving you that money based on the way you live the rest of your life.
That is to say, receiving a large sum of money should not be a cause of guilt, but using the money for ineffective, suboptimal, inefficient, selfish, greedy purposes should be a potential cause of guilt.
I don’t know what you’re going to do with the money, but let’s say you invested it all in blue-chip stocks yielding 4%. In today’s market, you’d probably have to tilt a bit towards Big Tobacco and Big International Oil (BP, Royal Dutch Shell) to get there, but under normal times, that shouldn’t be a difficulty.
That gives you $26,000 in income per year to do something intelligent with. As thanks to your parents, let’s say you decide to use 20% of that money (roughly $5,000) to make the world a better place. Do you realize how valuable someone willing to use $5,000 per year to help others is to the world? You can go to a restaurant, see a waitress grinding it out, and give her a $500 tip. You better believe she will remember that for the rest of her life. You can get in the habit of anonymously paying for the meals of others. As I write this, the Christmas season approaches. If you believe in any kind of afterlife, doing selfless deeds around the holidays is a great way to tilt the odds as a sort of insurance policy that you’ll end up in the right place.
Or you could get creative. Plenty of state schools in the Midwest have tuitions below $10,000 per year. You could start a permanent scholarship in your parent’s name that awards a full-tuition scholarship to an incoming student that meets a set of criteria that you find important, perhaps in line with your parents’ values. In helping the world, creativity and imagination is your friend. How could you feel guilty about your parent’s gift when you use the income it provides to make the world a better place?
By the way, you do not necessarily have to donate to charity at first. I’m persuaded by the Confucian logic that the greatest form of charity is trying to make sure that you won’t need to rely on the charity of others yourself. Getting your house paid off and getting stable investment coming in (perhaps by reinvesting the dividends for 3-5 years) is not an approach worth mocking.
The problem is that it could easily turn into a trap—you could find yourself getting greedy and pursuing more, more, more money for yourself. Also, people are creatures of habit. If you get in the habit of not donating money to help others, it can be a hard switch to suddenly turn on. In an old Rolling Stone interview, Bruce Springsteen once said that there is nothing harder to change than the obstinate heart of a woman or man. This is the risk: if you use the $650,000 to take care of yourself first, it could easily turn into “I will only take care of myself” because your compassionate muscles would atrophy. If you don’t give a damn about others and use the money only to satisfy yourself for the duration of your life—then you should feel guilty because you were handed a great opportunity to do good, and you chose to not benefit anyone other than yourself.
Money is nothing more than a tool that amplifies your inner character. If you’re a person that always helps others, then the possession of a couple hundred thousand dollars will amplify that fact. If you are petty and only look out for yourself, then money will amplify those character traits, possibly turning you into an insufferable monster. But the money itself is neutral—you have the sole power to determine whether your stewardship of money is a source of good or bad. Decades from now, you will know whether your parents were right or wrong to give you that $650,000.
But right now, you are at the start of that journey. The $650,000 is not something to feel guilty about, but rather, is an opportunity in which you should rejoice. It is how you handle your life the next thirty, forty, hopefully fifty years that will determine whether your parents were wise folks or fools to give you their lifelong wealth. You should feel energized and thankful—you have been entrusted with the raw materials to do something great. You have the full and total power to banish away any sense of guilt by using the money in a way that would make your parents proud. As long as thankfulness and a sense of gratitude towards the generosity of others always displaces personal greed and entitlement, you will do fine.