Confessions of a trust-fund baby

Just before my 16th birthday, my mom wrote a check from my account to buy me a BMW 328i, and that is how I learned to drive a stick shift.

That car had a lot of power under the hood, and I used and abused it. I almost crashed twice, once racing someone on the highway.

I didn't realize how quickly I was coming up behind another car — it looked like it was standing still — until my friend riding shotgun started screaming. The car saw me and swerved out of the way just in time (thank God). The other time, I was racing another young brat in his BMW on a backcountry road. I spun out and narrowly avoided sliding into a copse of trees.

Subscribe to The Week

Escape your echo chamber. Get the facts behind the news, plus analysis from multiple perspectives.

SUBSCRIBE & SAVE

Sign up for The Week's Free Newsletters

From our morning news briefing to a weekly Good News Newsletter, get the best of The Week delivered directly to your inbox.

From our morning news briefing to a weekly Good News Newsletter, get the best of The Week delivered directly to your inbox.

Sign up

That's what happens when you give something powerful and shiny to a 16-year-old. When I blew out the clutch on my toy, I traded it in for a luxury SUV and started driving a little more like a grown-up. So I survived high school.

Coming into my inheritance

I am a trust-fund baby. Ever since I can remember, I knew that there was an investment account with my name on it with enough money to buy a home, in cash.

Every month, money drops into my checking account. It's a solid middle class salary, untaxed, and it's contingent on nothing. I don't have to work for it, nor can anyone take it away from me if I behave badly. I did nothing to earn it, unless you count growing up without a dad — the fund stemmed from a wrongful death lawsuit. Every year the annuity increases by 3 percent, and it will continue to show up, every month, until I die.

As far as trust funds go, it's no Hilton fortune. My mom claims she could have negotiated for a much larger settlement, but she chose an amount that meant my sister and I could do what we love but still be motivated to earn money. (For the record, that was a really smart move.)

However, that was the extent of her financial education. In our household, budgets were not discussed: Money showed up, and we spent it. My mom seemed to take pleasure in cultivating two young women with a taste for fine dining and expensive clothes.

Then, when I turned 21, I was handed a shit ton of money. Here's something to consider if you ever want to do the same for your kids. (When you're done laughing, I'll continue.) The prefrontal cortex, which helps you make responsible decisions, isn't fully developed until you're 25. So I wasn't really capable of making the best decisions concerning my money. I didn't even get a financial adviser to go along with it, just my mom's advice to "always pay off your credit card bill every month." Well. That was easy.

First, I took a summer in Europe and brought along a little guide to shopping. Whenever I was bored, I took off for a new boutique. I had enough sense to back out of the stores selling $4,000 gowns. But I racked up about $15,000 on my new card in three months. Then I paid it off by selling some stocks. No big deal. When I missed my flight home, I just bought a new ticket.

Managing my money

I researched heavily before taking over my investment account. I was petrified (and still am) of making a stupid mistake that could decimate it.

When the market tanked in 2008, a year after the documents had been signed giving me control, I took the lazy route and left my investments as they were. An excellent decision, it turns out.

After college I moved to New York City, land of a thousand trust-fund babies. As I searched for apartments, I pulled a rent number out of my butt, without ever looking at my supposed budget. "$1,400 seems reasonable, right, Mom?" She agreed. Finding a job took some time, but I was more bored than panicky.

In fact, I was the cliché everyone loves to hate. I spent my days eating organic eggs benedict at the local café, doing The New York Times crossword puzzle, then traipsing off to afternoon yoga. I fell into a group of friends who, like me, had outside financial resources (read: rich parents). We spent our money on shopping, ski trips, all-night parties with $50 entry, and drugs. I could blow $350 in a weekend on coke, ecstasy, and alcohol.

I felt like I was being reasonable. I enjoyed dressing well, but felt good about not buying the quilted Chanel bag I coveted. I would do weird things like walk 30 minutes downtown to avoid paying subway fare, then blow $250 on a purse when I got there. I donated lavishly to charity. One time I wired $6,000 to Thailand to help out a former tour guide who was in a financial scrape.

I did finally land a job I loved, and worked hard at it. I still partied, but I had the sense to keep my partying to the weekends; I showed up on time and never coked-up or drunk.

Leading a double life

Still, I felt guilty. There were clues, of course, that I had something unusual going on in my bank account. Editorial assistants are notoriously low-paid (which is probably why it attracts so many entitled white girls). At work one day, I kicked off my shoes and a coworker sang, "Caroline is wearing Prada sandals!" "They were on sale," I retorted. (True, but they were still $350.) I felt like I was secretly being judged.

When friends embarked on apartment hunts, they'd email and ask how much mine cost, leaving me no choice but to break the news that, no, they couldn't afford something in my neighborhood. The few vacation days I had I spent in Europe and the Caribbean. After dating a guy for a month, I would invariably blurt out, "I'm a trust-fund baby!" I was sure he'd figured it out already.

Being a trust-fund baby felt like a core part of my identity, like my sexual orientation or being a writer. You just couldn't understand me fully without understanding that — but I still didn't want people to know. When I told close friends, I did it in the hushed tones of an ex-convict. Every time she got jealous, my very best friend told me, she'd remind herself that my dad was dead and hers was alive.

My sister had blown through her account on one and a half graduate degrees and five career starts. But she gave me excellent advice: Don't pay for other people's stuff. It can ruin a friendship. So when a friend would say she couldn't afford dinner and just wanted to drink some wine at the apartment, I bit my tongue and agreed.

A double-edged sword

I was spending $1,000 more per month than I was taking in, but it didn't register; my investments were appreciating as the stock market recovered. I wanted to live within my means, to "live like a normal 25-year-old," but when I wanted to buy something, I couldn't tell myself no.

There were never any consequences. I could pay off any credit card bill with a click of a button. I knew that I wanted to keep my trust fund intact, but for what? I didn't want to buy a home yet. I could start a business, but doing what? The only thing I really wanted to do was enjoy my life while I was still young and cute.

But I was also besieged by self-doubt. Would I be a better person if I had to struggle? Would I actually go out and get freelance assignments (instead of partying on the weekends) if I needed them to pay the bills? Should I just donate it all to charity?

Every time I had a hard day at work, I would think, "I could just quit. It doesn't matter." What saved me was my inherent love of writing, and the recognition that quitting would make me an insufferable brat that even I wouldn't want to live with.

Having that money sitting there gave me license to do anything. I would always be able to bail myself out of jail, pay off a hospital bill, hire a fancy lawyer. The only thing stopping me was a sense of propriety and concern for my reputation.

Hitting (spiritual) bottom

Still, I knew this couldn't be the point of life. I started to study Buddhism, with its emphasis on non-attachment to worldly things. I read nonfiction books, which told me that strong relationship bonds, not money, were the best predictor of happiness. And I discovered that there is a peculiar emptiness that comes with leaving a snobby boutique loaded down with $1,500 worth of clothes and nowhere to wear them.

Then, one day, I woke up. Literally.

I was staring at the ceiling in my apartment, remembering the fight I'd had the night before with my friend (something about her offering coke to my straight-edge sister and me complaining about it to a mutual friend). She'd stomped out and left me at the club, alone, as the lights came on. My heart was still racing from too many uppers, and suddenly I was having a panic attack. I was sobbing, barely able to breathe. I felt hollow. Were these real friends? Was this real life? Money, I realized, had bought me a well-lined, suffocating nest.

It was my 25th birthday when I realized the rules applied to me too. By that I meant the rules of personal finance, like budgets and savings accounts, but also the rules of life, like choosing good friends and treating your body well. Money, I had discovered, was not a magic bullet. Working hard, a little bit of self-denial, and being nice just might be.

A fresh start

Slowly, I started to change. I moved into an apartment with ugly brown carpeting in a boring neighborhood with a nice roommate. I started an emergency savings account, so I would stop selling off stocks to fund my whims. I made new friends who were struggling to make ends meet on their meager salaries. And I enthusiastically embraced $5 tacos for my 25th birthday dinner. I stopped doing coke.

Shopping… well, it's still a little bit of a problem. I'm working on it.

Am I happier? I think so. I haven't had another panic attack. I get satisfaction from watching my emergency savings rise. And I adore my friends, especially since they keep me grounded. Case in point: I've learned to love a summer stay-cation.

I'm also grateful for the huge safety net I have beneath me. Let me repeat that: I am so outrageously grateful for the fact that I will never end up homeless, that I can afford to have a job I love, that I don't have student loans. Money buys me freedom from stress and worry.

But it's true what they say: Money doesn't buy happiness. It's just a tool. If I use it wisely, I can inch closer to the life I want: An apartment of my own in the big city, a byline in a respected magazine, and a tight-knit group of friends. As I found out — thankfully early on — it can also be a dangerous vehicle for self-destruction.

So there you go, that's the whole, unvarnished truth. Have at me in the comments.

*The name of the contributor has been changed to protect her identity and her financial accounts.

More from LearnVest...

* How I squandered my inheritance at age 18

* If I only knew then... Tales of financial hindsight

* 5 amazing money lessons my single mom taught me