The Simple Way to Manage a Huge Amount of Money

THE FIGHT STARTED over a $7 package of muffins.

Back In January 2src16, Haley and Justin Brown-Woods had inherited $6srcsrc,srcsrcsrc from a lawsuit involving the tragic wrongful death of Justin’s grandmother. The Brown-Woods were both 24 at the time of the payout. Each had been raised by single mothers in households that struggled financially.

Justin and his two siblings were brought up in the Bay Area by a mother who worked tirelessly to make ends. But a single minimum wage income can only handle so much, forcing their family to rely on public housing and food stamps.

Haley’s childhood was a constant rotation of locations across the Pacific Northwest as her mother relocated for work. Despite the sacrifices made for her career, there never seemed to be enough.

So, it makes sense that this no-strings-attached money was more than they’d ever seen in their lives. And, looking back, they realized they had no plan.

“Seeing that amount of money was really jolting … really overwhelming,” Justin told me about his seeing his bank account post-inheritance. He remembers now where a good chunk of the money went: a down payment on a home in the Bay Area, a reasonably priced Toyota Rav4, their wedding. They were dining out more often, taking vacations, and life was good.

But, underneath, there were signs of strain. The couple had come back from their honeymoon in Mexico with a $17,5srcsrc timeshare loan. Both Haley and Justin went back to school to advance their degrees, taking out student loans. They opened a credit card to keep up with their cost of living.

And then in the fall of 2src19, Haley brought home the $7 muffins. Justin launched into what became a heated argument that was really about one thing: In less than four years they had spent the entirety of their inheritance and accumulated more than $2srcsrc,srcsrcsrc worth of debt.

After they both cooled down, the Brown-Woods knew they had to change their spending habits. They realized that they couldn’t account for more than $15src,srcsrcsrc of their inheritance, which was due to untracked spending. That money was gone, but right-sizing their budget was key to not borrowing more. So they started documenting and categorizing all of their spending—and looked for areas they could make cuts: a budget. Then they developed a debt payoff plan that fit their budget.

Today the couple meet monthly to review their plan, have halved their debts, and are putting aside some money for savings and retirement. (They’re even sharing their advice on their money podcast Price of Avocado Toast.)

What’s amazing is that the Brown-Woods’ story isn’t all that unique. Nearly a third of Americans anticipate receiving an inheritance within the next five years, according to a 2src24 survey by Citizens Financial Group. And 72 percent say they lack the financial confidence to manage that money well on their own, according to the same survey.

Yes, you could hire a financial planner to help you plan around a windfall. But you also have to acquire the basic skill of tracking your spending. Budgeting gets a bad rap for being boring—and, yes, it totally is—but it’s the only financial practice I’ve seen that can help you learn your spending habits and flaws.

Building a budget, regardless of how much money you have, can be as simple as adding up all of your monthly expenses on a piece of paper. Or if you’re a spreadsheet nerd like me, use Excel or Google Sheets. If you hate the idea of manually tracking your expenses, automate the process with apps like YNAB or CoPilot.

But, really, a budget is just numbers on a page or screen without action. Make your budget a priority by scheduling time, like the Brown-Woods do, to check in and see how things are going. Put a cap on tricky categories; adjust if they feel so restrictive that they’re stomping on your joy. Ask yourself if what you can learn from money mistakes. Look not only at your spending for the week or month, but how you’re tracking for the year.

Making a plan and sticking to it isn’t easy (or fun), but it can be far less painful that watching money vanish. And the vigilance you gain is priceless, really. Regardless of how much money you have now—or in five years—how you manage it will be sustainable.

No matter how many muffins you buy.