One of the worries people have when they get a windfall is that they are going to blow it with nothing to show for it. I know I felt that way last year when my father passed away and left my brothers and me some money. Thankfully, I was well versed in YNAB so I had confidence I’d make the money work for me and have something to show for it. There are probably lots of ways to handle an inheritance in YNAB, but I thought I’d show you how I did.
When I received the inheritance (about $75,000) in January this year, I deposited it into the checking account I share with my husband, using the category Ready to Assign. I created a category called “Inheritance” and moved all the money there. I immediately transferred the sum of the inheritance to our High Yield Savings Account so it could earn a little interest. (In fact, it’s earned more than $2,000 in interest so far.)
I decided right away on a couple of experiences I wanted to fund with some of the money: My trip to Australia for my niece’s wedding and a nice party in honor of my husband’s 70th birthday. (I know my father would have approved!) I also used a bit of the money to give us a some ease in our budget after my husband retired and we were settling into a new income reality.
I decided that the rest of the money would go toward some home improvements (painting, windows, repairs). I dragged my feet on getting estimates because, I think, I was afraid the estimates would amount to more than a had in the Inheritance category. Not a wise strategy during times of inflation. I finally got estimates and we are making commitments to projects. I just wrote a check for a deposit for getting the trim of our brick house painted and moved money from the Inheritance category to the Repaint Trim category. As soon as all estimates are finalized, I will move the money within the budget from Inheritance to their final categories. And when I’m actually spending the money, I’ll transfer funds from the HYSA to the checking account as necessary.
I believe that having the money in an Inheritance category protected it from being spent before I knew what I wanted to spend it on. If I’d simply put it in a savings or emergency fund category, I think I would have been more likely to dip into it. Was I following Rule One (give every dollar a job) while I waited to figure out how to spend it? I believe I was. But moving all the money into the more specific categories and giving those dollars their real jobs will feel great.
Leave a Reply