‘I fear, though, that if I do that, I’ll open the flood gates and eventually drain the account’: Should I leave my trust untouched for emergencies, or use it to make college memories?

Hi Money Minder,

I just inherited a medium-sized trust with around 200k USD, and I’m not sure how to handle it. It’s invested in the stock market and makes a decent 6% return per year. My family taught me to only use it for necessary things like rent, a down payment on a house, or a car in the future.

But, I really want to use 1k USD to go on a trip with friends (I don’t have much money right now, only about 3k USD in personal savings). I’m confident I’ll get a good job after college, so I feel like I can afford it. However, I’m worried that spending now might lead to spending more unnecessarily in the future.

Should I leave the money untouched to avoid setting a bad habit, or is it okay to enjoy some experiences with the trust fund while I’m in college? I know the decision is ultimately mine, but I’d like to hear what you think!

Goodbye,
College Wanderer

Response from THE MONEY MINDER:

Hello There,

Congratulations on gaining access to the trust fund! It’s great that you are being thoughtful and strategic about how to manage these funds. It’s understandable to feel conflicted about when and how to use the money, especially when considering long-term financial goals and potential future needs.

Based on the information you’ve shared, it seems like you have a good plan in place to leave the trust fund invested in the stock market and only tap into it for essential expenses like rent, down payments, or larger purchases down the line. This approach aligns with your family’s money philosophy and sets a solid foundation for future financial stability.

Regarding the desire to use $1k for a trip with friends, it’s important to consider the potential risks and consequences of dipping into the trust fund for non-essential expenses. While making memories and enjoying experiences during college is valuable, it’s essential to strike a balance between short-term enjoyment and long-term financial security. If using the money for travel now could lead to a pattern of unchecked spending and draining the account on impulse purchases, it might be best to hold off on this specific expense.

Instead, you could explore other ways to fund your trip, such as saving from your personal savings or setting aside a portion of your future high-paying job income for discretionary spending. By approaching this decision with a practical and disciplined mindset, you can ensure that you’re making informed choices that align with your overall financial goals.

Ultimately, the decision on how to use the trust fund should come from within and reflect your values, priorities, and aspirations. Taking a balanced approach that considers both short-term enjoyment and long-term financial security can help you make the most of this opportunity while setting yourself up for financial success in the future.

All the best from THE MONEY MINDER.