The Barefoot Investor has labelled a single mother who said she doesn’t want her $3million inheritance a ‘weirdo’ – albeit a wise one – and encouraged her to accept it.
The Tasmanian mum, who is raising two children while working as a nurse, said she was set to receive the surprise inheritance from a relative but had doubts whether accepting it was the right choice for her family because of the ‘complexity of wealth’.
‘This is generous but wealth like that brings complexity,’ she wrote in a letter that was published in a Herald Sun column.
The mother explained she already earns enough money to sustain herself and makes significant super contributions.
‘I have just paid off my house in Tasmania and am now adding 10 per cent to my super each pay,’ she said.
‘I don’t renovate or travel far. No dishwasher and a broken oven. I have set myself up to retire on $42,000 per year when I’m 65.
‘I don’t need more and I prefer the simple life of living within my means.
‘I want my children to do well in their own right and own a home eventually. However, I don’t want to take the satisfaction of doing it themselves away.’
The woman admitted she was thinking of accepting the money to buy a ‘large parcel of land in Southern Tasmania to protect it from developers in the future’.
Scott Pape’s response to the mother began very bluntly: ‘You are obviously a weirdo.
‘However, your weirdness comes from a place of deep contentment, wisdom, and living your values.
‘You have something that most people will never have: ENOUGH!’
Rather than turning away the considerable inheritance, Pape encouraged the nurse to separate the funds into three accounts.
‘First, I’d put a small amount in an online savings account for emergencies – and to fix your oven!’ he said.
‘Second, I’d put a large amount into an ethically invested index share fund, given you’re bent that way.
‘Finally, I’d set up a private ancillary fund, which is a type of charitable trust.’
Pape explained the share fund would allow the mother to match any funds her children set aside for a future home, dollar for dollar, which would incentivise them to save more.
Meanwhile, the PAF could be used to make tax-deductible donations to any charity of the mother’s, or her children’s, choosing.
‘The key is to get your kids involved in deciding where to donate this money,’ Pape said.
‘Who knows, hopefully some of what you’ve got will rub off on them!’