To ask how you would spend inheritance?

[Username9876547]

If you inherited a good chunk of money, say £100-£150k from a relative, how would you spend it? If you still had a mortgage to pay, would this be your first priority? DH is due inheritance and we were considering purchasing a new car to replace his ageing Ford and perhaps having a once in a lifetime holiday for us and the DC, but it feels slightly wrong to spend money that a relative has saved on something so frivolous. WWYD?

When I inherited from my Mum last year we paid off the mortgage (interest only so no other choice), I paid off my credit cards, changed my car and we've had a holiday. I also bought a watch that I couldn't justify otherwise as I wanted something I could actually see if that makes sense.

I’d pay the (small) mortgage off and put the rest away for the kids to use as a deposit on a house.

I would do the following in order of priority

1. Pay off all debts excluding mortgage
2. Upgrade car (without going mad)
3. Sort out any maintenance issues with house
4. Pay off mortgage/pay a large chunk off mortgage
5. Look a pension savings going forward - increase monthly payment?
6. Home improvements
7. Savings - especially if pension savings need boosting/you haven't saved enough money for DC uni costs/help with house deposit
8. Nicer holiday than usual (but that can be done out of increased ability to save through reduced/no mortgage)

I’d pay off our debts and have an extension. Anything left over would go off the mortgage

£50k would clear our mortgage. Then I would clear any other debts.

Then I would consider £20k into an ISA for me and £20k into one for DH. Stocks and shares ISAs can be set up to provide some monthly income if properly invested

That would probably take care of about £100k, so still £50k left for a holiday, car (we buy good second hand ones) and some jobs around the house.

I think it's fine to use some now but put most of it to the mortgage.

My DH and I have always been mortgage free due to a similar size of inheritance.

Our quality of life is fantastic (relative to our earnings and family size) due to this. We feel very priveleged.

Our net income is c. £2200 PCM and from this we are able to go on several (usually UK) holidays per year, largely buy and do what we want and pay people to decorate for us which are our big luxuries. Our bills are £900 which includes savings of £50 pcm for each of the kids, solid gold income protection, life and critical illness cover and £200 into a private pension for me. This helps us feel secure going forwards.

Our lifestyle isn't extravagant (we have one 10 year old car) but we feel very comfortable.

Based on my albeit skewed perspective I would say mortgage free asap.

In you position OP I'd do all three, it makes sense to replace the car without needing finance and a holiday needed be megabucks, then put the rest to the mortgage even if it's not enough to clear if. Think what a difference long term having a much smaller mortgage will make. Our mortgage is pretty big (180k) and having gone through 18 months of redundancy when my dad offered to pay it for us, I can't wait for the day it's gone and we have the security of owning our house.

Beach hut and a Rolls Royce.

I've already warned my husband.

Almost £200k outstanding on mortgage so not enough to clear completely but would reduce our payments and length by a lot.

Sibling is receiving the same amount and will use this to clear his mortgage completely, which will be seen as the “right” thing to do. We were just unsure if we would be flamed by family for using some of the cash for a holiday. Obviously most of it will go towards mortgage, but we weren’t sure if we were being stupid by not using the whole lot on mortgage.

A small percentage for a holiday sounds like a good choice, you can always "pay yourselves back" into savings or mortgage overpayments from the money you save in future if that helps you feel better / more purposeful.

Would family know the exact proportion of your home that's owned outright or by the bank? Could you just not mention it?

I think an element of trepidation is normal, I still feel incredibly guilty about my lifestyle given the inheritance was just "luck" (the silver lining in a whopping cloud, in reality). We have always kept our finances wrt home ownership secret, it avoids hurtful comments.

I imagine to get an inheritance of this size you've lost someone pretty close. I'm sorry for your loss

Oh no it is totally fine to spend some on holidays and that OP.
Also sorry for your loss

Spending an inheritance can be emotional for precisely the reason you identify. Someone's life savings v your choices.

It's not entirely logical but if you feel guilty at spending the money on a holiday, could you put it all against the mortgage and then benefit from lower repayments and save up what you would otherwise be paying in mortgage payments, to fund a holiday in a year or so? That way, you have done the solid sensible thing with the inheritance itself and have the benefit of the holiday for your family.

It also depends a bit on what the deceased was like. If you know she'd love you to have the holiday of a lifetime, go for it. If she was more of a cautious saver type, then take your lead from that.

This did happen to me. We paid off our house, bought us each a new car cash (good reliable ones we each kept for 10+ years) as we both needed one at the same time, bought a small stereo system as our treat and put the rest into a university fund for our children if we were to have any (we had just gotten married).

University is wicked expensive here (States) and now 16 years later we have $140K for ds university (but that won't be enough to cover it even) It saved us from having to get a 2nd job to pay for university for ds because there is no way I want him to start his adult life with so much debt. We look at it as my mum's gift to the grandson she never knew.

We are mortgage free, so I think some not madly extravagant holidays, upgrade both cars (not to anything top of the range, but something sensible and reliable), a sizeable chunk into savings for the kids and then either into SIPPs or a BTL property for our retirement

I'd clear the mortgage (about 60k) revamp the garden (5k) buy a small car (5k)and hand back my current one which I hate. the I'd either buy a small holiday home near the sea or I'd buy a vw camper and have a luxury holiday.

I think it is absolutely fine to spend some money on a holiday if that is what you want to do and feel you need.

My last parent died recently - I've got the opposite issue - small inheritance (a few thousand) and I've already paid off the mortgage and have savings - I felt like it would get absorbed into nothing if I just saved it and become meaningless. I'm going to spend it all on a really nice bespoke hardwood front door and some art for the house (if there is any left over) - in my case I think it is important to spend it and enjoy it and let it be important to me.

With the kind of money you are talking about then you can easily do both.

I do feel obligated to do something worthwhile with inheritances and I think a combination of mortgage, car and holiday would be fine.

Personally if I had £150k from close relatives I’d put £125k on the mortgage (probably drip fed to avoid punitive ERC), £10k to landscape the garden and £10k for a holiday. I’d want to do something with the rest to remember the relative specifically whether that be art, furniture, charity donation, experience they would have enjoyed etc

My DH inherited a largish sum (not 100k plus though)...he bought me a (second hand but new to me and much appreciated) car, decorated the house and paid off a lot of our mortgage. He bought himself...new trainers. I say enjoy a bit but be sensible with most (90%) of it.

Spending an inheritance can be emotional for precisely the reason you identify. Someone's life savings v your choices.

I found it hard as I didn't want the money, I just wanted my Mum (and still do). However my Mum loved buying herself ornaments and nick nacks so when I've bought things I've known she would understand.