living with money

What It’s Really Like to Have a Trust Fund

Photo: Yulia Reznikov/Getty Images

Living With Money explores the personal side of personal finance: how our bank balances do and don’t define who we are.

What if you didn’t have to worry about money — or at least, not as much as 98 percent of Americans do? Less than 2 percent of the U.S. population receives a trust fund, usually as a means of inheriting large sums of money from wealthy parents, according to the Survey of Consumer Finances. The median amount is about $285,000 (the average was $4,062,918) — enough to make a major, lasting impact. Here, a woman in her 30s talks to Living With Money columnist Charlotte Cowles about how having a trust fund has affected her life.

My parents didn’t discuss money when we were young. Then, when I was 12, they got divorced, and as part of the proceedings, my dad set up a trust fund for me and my siblings. He made sure we knew that it was for school, and that our education was paid for. I’d known pretty early on that I wasn’t going to have to worry about college tuition, and always took it for granted, but that was the first time I heard about trust money. From then on, even before I knew the specifics of what it was, I was aware that there was something coming my way.

I grew up relatively affluent, in an affluent neighborhood. Our house was bigger, we had nicer cars than most people, and I always went to private schools. Still, I don’t think we had an extravagant lifestyle — both my parents worked hard, and I got hand-me-downs from my older siblings. I mostly became aware of our financial status because my friends’ parents made comments about it. I played basketball in different leagues with kids from more blue-collar backgrounds, and when I went over to their houses, sometimes their parents would say something about my school, or our house, or when I got older, the clothes I’d wear. It kind of shamed me.

My extended family on my dad’s side is much wealthier than my immediate family is. My dad didn’t work in his family business — he wanted to have a different career, and make it on his own. While he did well professionally, his siblings are better off financially. A lot of my cousins have never really worked, and my mom makes comments about how they’re irresponsible with money. My mom doesn’t come from wealth, and she always tried to talk to us about the importance of saving, whereas my dad was more like, “Live your life. Go spend it. Travel.” If anything, I feel like he acted like we had more than we did — he had an inflated sense of security, financially. It wasn’t until about five years ago that I realized my cushion wasn’t all that huge.

When I was 25, my uncle, who was the trustee of this fund, agreed with my older siblings to give us control of it. I was sent a physical check for about $400,000, and that was crazy. I immediately took it to the bank and put it in a money market account. Looking back, I feel so stupid. At the time, the market was at a historical low, but I didn’t really understand how to invest, or how to get people to help me. I missed so much opportunity. Part of my hesitation was that I was so nervous that I would blow it. I didn’t trust myself to be responsible. I worried that if I invested it, I’d put it in jeopardy. If I had, I would be sitting on a lot more money now. But I was also about to start a Ph.D. program, and graduate school is expensive. I knew I’d need to pay tuition and living expenses for years. So that’s where most of it went.

To be honest, I probably thought the fund was bigger than it was. Before I had control of it, I could still tap into it if I wanted — like, “Hey, can I take out a couple grand for this trip to Tanzania?” I also got a car during college that was paid for by that money. My dad basically told my uncle, “Everybody gets a car,” and so I bought one that was way too nice for me — it had leather seats and a DVD player and all this stuff I didn’t need. I didn’t even shop around. I was just like, “This car’s cool. I want this,” and nobody questioned it. I think I should have had more oversight. I should have gotten a used car, or at least a smaller one.

There are day-to-day luxuries that I’m used to and that I know other people don’t have. I shop at Whole Foods and spend the extra ten bucks to get my groceries delivered when I’m feeling lazy. I get takeout when I want to, and I buy nice clothes. I still do struggle to budget myself, and I’ve never really had to be strict. I’ve been a full-time student for much of my adult life, and while I also had a job for the past couple of years, I didn’t stick within the income from my paychecks.

One thing that sucks is that two of my older siblings borrowed and spent some of my share of the trust before I knew what was going on. One of my sisters didn’t pay me back for almost a decade. At first I wasn’t even aware of what she owed me — one of my other siblings told me about it. I fumed about for a while, and then, when I wanted to buy a house, I acted like I couldn’t make the down payment unless she paid me back. It gave me an excuse to ask her for the money, and instilled a sense of urgency. She paid me the original amount that she borrowed, with no interest. If it had sat in the market for that time, then it would be a much larger amount now. I’m disappointed that she didn’t offer more, but I didn’t feel like I had a right to ask. So I lost money, and that’s a bummer. It was just awkward.

Being the youngest, I also saw my older siblings make some poor choices with their money, and that made me want to be more careful. Several of them made risky real-estate decisions that backfired. I got a financial planner much earlier than any of them did, and started saving for retirement. I didn’t buy a house that I couldn’t afford.

There’s still a weird misconception that we have more money than we do. My cousins will invite us to do insane things, like go to Aspen for a week. A cousin recently asked me if I wanted to invest in some new company, and I was like, “Yeah, but with what?” When we visit them, they’ll want to get an UberBLACK, and what could be a regular $30 Uber winds up being $100. That adds up, especially over a weekend. My uncle, the one who previously oversaw our trust, always writes me checks when I see him, which is so nice.

I’ve spent a lot of money on travel. Maybe some people think that’s throwing it away, but it was really fulfilling for me. I went on a trip to Africa before grad school, and some other people in my program did all this fundraising or applied for grants to be able to afford it, and I just bought my ticket. It was easier for me to have these experiences, which I could also put on my résumé, than it is for most people.

I did spend money on stupid shit when I was younger. I mean, I still spend money on stupid shit sometimes, but I’m more selective about buying things like clothes. I wish I hadn’t shopped so much in my 20s because now it’s just clutter. I wasn’t like, buying Gucci, but I would buy a $300 dress, and that was not a thing that my friends could do — so they would borrow my clothes all the time.

I don’t feel like my friends ever took advantage of me, except for one time. I took a trip to Europe and I let a friend borrow my car while I was away. I figured she would just use it to go to the grocery store or whatever. But she took it to a music festival and ran it into a pole. She returned it damaged, reeking of cigarette smoke with footprints all over the windshield and windows. She didn’t even try to clean it up, nor did she pay for it to be repaired. It wound up costing me about $900. I think she just assumed I could afford it and that it was no big deal for me, whereas it would be a big deal for her.

There’s also an opposite situation where my friends won’t want to spend money on something that I want to do — like go out to a restaurant, or get this particular bottle of wine at dinner, or get better seats at a concert, and I’m like, “Goddammit. Just let me pay for it. I want to.” That said, I have pride in the fact that my friends have a wide variety of incomes. My friends are cool people doing cool things. We don’t have to do things that cost money. We’ll go camping or just hang out at each other’s houses.

I feel the need to prove that I’m down-to-earth almost every day. When I talk about trips I’ve taken, I’ll mention that I stayed at hostels, and that’s true, but I’ll stay at really nice places too. I definitely talk up my roughing-it experiences more than my luxury experiences. I’ve also pretended like I had student loans when I didn’t — commiserating about debt-repayment plans with people I knew at school or work. I do feel bad about that, but I also never want people to make assumptions about me, or to think I haven’t worked hard.

I’m very self-conscious around my in-laws. They probably don’t judge me as much as I worry that they do, but I’m very insecure about making sure that they know that I do earn money myself. Still, I think that they roll their eyes a little bit at my privilege. My mother-in-law has said things like, “Well, I’m not rich like you.” My husband’s brother used to date this girl who would look up how much my outfits cost and talk about it behind my back. She basically called me a snob, just because I had nice things. It makes me feel both guilty and defensive. Yeah, maybe I wouldn’t spend money this way if I didn’t have this security. But I also work hard, and a $300 pair of shoes in your late 20s or early 30s isn’t that insane. Still, I’m aware that I make the excuse of “I’ve worked really hard” even though most of that work has been in school. I do feel conflicted about what I have sometimes.

Occasionally I buy things and don’t want anyone to know how much they cost. I recently ordered some new clothes, and my husband opened one of my packages. I really didn’t want him to look at the price tag. I have this mindset of, “If you see what I just spent on a pair of shoes and a dress that I don’t need, you’re going to think I’m a spoiled brat.” I’d just be embarrassed. And he was like, “I don’t care. You’re responsible. You’re reasonable. I trust you. If you splurge every once in a while, you have your own account and that’s totally fine. We don’t need to approve each other’s spending because it’s not a problem.”

My mom always told me, “You have to have your own job. You have to have your own career. Never ever depend on anyone else for your finances.” After the divorce, she went through a period where she was extremely worried about money. She taught me some great values, but she didn’t have certain conversations with me about financial opportunity that I wish she had. As a result, I didn’t really think about maximizing my financial potential — it was more about playing it safe and making sure I was employable.

Most of the money is gone now, and that’s scary. It also makes me realize the privilege that I’ve had. At first, I felt like I was set for life, but I just didn’t realize how expensive life was. I would pay my tuition or others bills and actually see the numbers decrease, and it was like, “Oh, fuck. This is not going to last me.” I want to have kids and be able to afford this sort of thing for them someday, and particularly be able to pay for their college education. I’m nervous that I’m not going to be as successful as my parents were, but there’s really no reason that I wouldn’t be, other than because I squandered the opportunities that I had.

I am nervous about maintaining the lifestyle that I’ve become accustomed to. But that’s also made me a lot more ambitious about my career and income goals. There’s nothing holding me back from making money. It’s up to me now.

I love my financial planner. I was incentivized to start working with her partly because I’d realized the opportunities I’d missed by not planning sooner, but also because my husband — who was then my boyfriend — wanted to plan with me. We made an appointment together before we were even engaged. I basically said to her, “Here is the rest of my money. Don’t let me touch it.” Obviously, I can access it if I want to, but I asked her to put it in an investment portfolio that’s geared toward long-term goals, and that prevents me from saying, “Hey, can we liquidate some of that?” She also takes money out of my account every month for savings. Between her and my husband, that’s two people I feel accountable to, and it’s been helpful to have that oversight.

I do keep an “oh, shit” savings fund, for some wiggle room. My financial planner and my husband know I have it, but they don’t know how much is in there. She probably thinks it’s about $10,000, but it’s more than that. I know that I’m not very good at limiting things that I want to do, like those daily luxuries, and I want to have something I can fall back on when I need to. It makes me feel more secure to have a little secret cushion. I probably always will.

What It’s Really Like to Have a Trust Fund