When 23-year-old Jackson from New York called into The Ramsey Show, he wasn’t asking how to spend his inheritance. He was asking what not to do with it.

A few months earlier, he and his brothers had sold their parents’ home, leaving him with about $450,000. He had no debt, had just graduated from college, earned about $75,000 a year and was renting with his brother while planning a future move from Long Island to New York City.

Yet instead of feeling empowered, he felt stuck.

“I’m just wondering what to do with it,” Jackson told the cohosts (1). “I have all of that money … just sitting in a CD right now.”

It’s a familiar reaction. Sudden wealth — especially at a young age — can create decision paralysis.

Large inheritances at a young age are both rare and risky. Without experience managing six-figure sums, many people either spend recklessly or worry about making the “wrong” move, resulting in no move at all.

Parking the money in a certificate of deposit allowed Jackson to avoid impulsive purchases, and was something host Dave Ramsey praised as preventing him from doing “something stupid with it.” He even said Jackson was “wise beyond his years” for not spending it.

But Ramsey also warned that letting the money sit too long comes with its own price. Freezing can be just as damaging as rushing, especially when inflation and missed investment years are at play.

Inflation erodes purchasing power, and time — especially starting in your early 20s — is one of the most powerful drivers of long-term wealth.

Ramsey pointed out that if the inheritance were invested at long-term market rates, “it would double in about seven years.” He contrasted that with the low yield of a CD, saying the money “should have made five times as much” over recent years if invested instead.

This matters because young adults don’t just have money working for them; they have time working for them. According to the latest Federal Reserve data, the median net worth of Americans under 35 is just $39,000, compared with more than $364,000 for those aged 55 to 64 (2).

So, a $450,000 inheritance at 23 is a massive head start, but only if it can grow.

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One temptation Ramsey shut down quickly was using the inheritance to buy property in New York City. Even with $450,000, the math doesn’t work, “450 will not buy anything in the city,” he said. “Not paid for.”

Without the income to comfortably support a mortgage, Ramsey argued, tying the inheritance up in real estate would add pressure rather than freedom. The same logic applies to lifestyle upgrades or helping others too aggressively, too soon.

Read More: The average net worth of Americans is a surprising $620,654. But it almost means nothing. Here’s the number that counts (and how to make it skyrocket)

Instead, Ramsey emphasized discipline and simplicity “to get the most lift,” and separating current income from inherited wealth.

“Leave it alone. Pretend like you don’t have it and just live off your income,” he advised.

That approach aligns with guidance from the Certified Financial Planner Board of Standards (3), which warns that people who receive sudden wealth can underestimate how quickly it can disappear without structure, guardrails and professional guidance.

Ramsey’s core recommendation wasn’t about picking stocks or timing the market. It was about education and behavior.

He urged Jackson to work with a vetted financial professional, learn how investing works, place the money in growth stock mutual funds, then keep his “hands off of it.”

Above all, he said not to invest in something because he said to or another expert said to, “But because you start to understand it.”

Behavioral finance research shows that investor behavior — not market returns — is one of the biggest drivers of long-term outcomes (4). Having a plan, understanding risk and avoiding emotional decisions often matter more than chasing high returns.

It would be easy to frame $450,000 as life-changing money. But Ramsey and cohost Ken Coleman were adamant about the importance of staying disciplined and remaining focused on the end point. In other words, windfall is not a guarantee.

“This is a massive head start for you,” Coleman said, adding that Jackson should “just leave it alone” after it’s invested.

IRS rules reinforce that point. While inherited assets can receive favorable tax treatment, including stepped-up cost basis in some cases, gains are still taxable once investments are sold, and missteps can create avoidable tax bills (4).

In other words, inheritance creates opportunity, not immunity from financial mistakes

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Article sources

We rely only on vetted sources and credible third-party reporting. For details, see our editorial ethics and guidelines.

The Ramsey Show Highlights/YouTube (1); Board of Governors of the Federal Reserve System (2); Certified Financial Planner Board of Standards (3); Enterprising Investor (4); IRS (5)

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