MY MONEY

Ask Paul: My partner died and I'm scared I'll waste the $100k payout

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Q. I've recently been awarded a tax-free death benefit amount of $100,000.

I'm 29, work part-time in a cafe and have no debts (I didn't go to uni, I never bought a car and I live with my parents, who rent).

I come from a family and background that traditionally hasn't been good with money. I'm aware this is an opportunity and I'm scared to ruin it, especially since there's an emotional component (the death of my partner) to being given this money.

askp ual clitheroe partner died death benefit inheritance

At the most, I might buy sensible things like a small used car or maybe set aside some money to travel.

I want to grow the rest of the sum but don't know where to start. Should I invest in going to a financial adviser? The recent news has made me wary of banks and advisers in all forms. I don't know what to do or what questions to ask. - Jane

I am really sorry to hear about your partner, Jane.

Your comments around money are well made. This certainly is a financial opportunity you must not waste. I support planned spending on a small used car and for some travel. Right now I would suggest you just put the balance into a 90-day (or similar time frame) term deposit with a bank. Do take a look online at what rates are available.

They won't be high but it means your money will grow. Most importantly, it can't be accessed until the term is up.

My greatest concern would be that it sits in your everyday account and you find in a few years it has all gone. If I was in your situation, I would be looking at this money as being a deposit on a home.

Being good with money is not hard but it needs discipline. So what would really benefit you would to be to look at your budget and set up a savings program. Add to your investment on a weekly basis.

Do this and you will quickly become a successful money manager. I feel home ownership is really valuable, as once paid off it provides secure accommodation and in the long term will be a reasonable investment.

I suggest a three-step plan: first, secure the money you have; second, start a savings plan to add to the money; finally, plan to buy your own home once you feel confident to do so.

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Paul Clitheroe AM is the founder of Money and serves as the publication's editorial adviser. One of Australia's most trusted personal finance experts, Paul has spent decades helping Australians build wealth, manage debt and make smarter money decisions. He is widely known for host­ing the Money TV program and authoring best-selling personal finance books. Since launching Money in 1999, he has played a leading role in delivering practical, independent financial guidance to Australians. Paul is chair of InvestSMART Financial Services. He was the founding chair of Ecstra Foundation, a national not-for-profit focused on improving financial wellbeing, from 2018 to 2026, and led the Australian Government's Financial Literacy Board and Financial Literacy Australia from 2004 to 2019. In academia, Paul is chair in financial literacy at Macquarie University, where he is also a Professor in the School of Business and Economics. Ask Paul your money question. Due to volume, Paul cannot respond to questions posted in the comments section.
Comments
Rams
March 13, 2019 4.16pm

Hello Jane

In my opinion, based on your situation, I would snuggest the following:

1. Keep your current job.
2. Postpone your travel and buying used car (They are bad expenses, they will eat your money).
3. Put your whole $100,000 into a bank term deposit for 3 months or 6 months (depending on the interest rate).
4. There are good online banks giving best term deposit rates, with govt. guarantee up to $250,000.
5. In the mean time try to qualify yourself to get a better paid job.
6. After 3 or 6 months rollover your entire money for another 3 or 6 months term deposit.

I am not a financial planner. This is based on my personal life experience.

Kind Regards and Best Wishes
Rams