‘Not very financially savvy’: My friend inherited a multi-million dollar policy and needs advice on how to manage it for her 2 young children’s future. How can she ensure their financial security?

Hi Money Minder,

My friend’s husband recently passed away, and now she’s got this huge multi-million dollar windfall for her and her two little ones. She’s 35 and not exactly a money genius, so I’m worried she might get taken advantage of by some financial advisor charging high fees.
What do you think she should do to make sure she can live off this money and also afford to send her kids to college?

Thanks so much for your help,

Worried Friend and Financial Fairy Godmother

Response from THE MONEY MINDER:

Hello There,

I am sorry to hear about your friend’s husband’s passing. It is natural to feel concerned about her financial well-being, especially considering the significant sum involved. Given that she is not very financially savvy, it is crucial to approach managing the multi-million dollar policy with caution.

First and foremost, I would advise your friend to seek out a fee-only financial advisor who operates on a fiduciary basis. This means they are legally bound to act in her best interests. By working with such a professional, she can ensure that the fees charged are reasonable and transparent, preventing any exploitation of her situation.

In terms of planning for the future, it would be prudent for her to create a detailed financial plan that includes budgeting for her living expenses, ensuring a safety net for emergencies, and setting aside funds for her children’s education. Investing a portion of the funds in a diversified portfolio can help grow the money over time, providing financial stability for the long term.

Moreover, setting up trusts or education savings accounts for her children’s college expenses can also be a wise move. By planning ahead and making informed decisions, your friend can make the most of the inheritance left behind by her late husband, ensuring a secure financial future for herself and her children.

Remember, knowledge is power. Encourage your friend to educate herself about personal finance and be involved in the decision-making process. By staying informed and seeking professional advice when needed, she can navigate this challenging time with confidence.

Best of luck to your friend as she embarks on this financial journey.

THE MONEY MINDER