Dear Penny: Should I Tell My Parents I’m a Millionaire at 22?

Dear M.,

You’re an adult. You’re not required to show your parents your brokerage statements. The rules don’t change when you join the Two Comma Club.

But I also get that you may be dying to share this news with your parents. Becoming a millionaire at 22 is a huge feat. It’s natural that you’d want to make your parents proud by telling them you’ve struck it rich.

Obviously, we’re all wondering what you did to amass such a fortune at a young age. It doesn’t sound like you bought a winning lotto ticket. But no matter how much discipline it took for you to become a millionaire, people will probably look at you the same way they’d view someone who won a jackpot. And the golden rule for lotto winners is always to keep it under wraps as much as possible.

That said, I wouldn’t assume that your parents would automatically expect you to shower them with cash. Sure, some parents might treat their kid as a walking, talking ATM here. But I suspect that plenty of people would simply want to make sure their child keeps making wise decisions with their money moving forward.

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Yet there are pitfalls when others realize you’re loaded, even if you’re surrounded by people with good intentions. For one thing, people have tons of opinions about how you should spend your money. Even well-meaning family members don’t always give good advice. But perhaps a bigger danger is that when other people know you’re wealthy, you feel the pressure to act all Richie Rich.

Becoming a millionaire and staying a millionaire are two very different goals. Your odds of accomplishing the latter are much higher if you can refrain from acting like a millionaire right now.

A smart move would be to meet with a fee-only financial advisor to review your investments. Fee-only means they get paid for the service they provide you, rather than on commission. They’re required to act as your fiduciary, which means they’re required to act in your best interest. A good resource for finding a fee-based advisor near you is the National Association of Personal Financial Advisors website.

You can discuss your goals and make sure your investments are appropriate. Your advisor can help you with the less glamorous parts of being a millionaire, like making sure you’re adequately insured so you don’t put your fortune at risk.

I’m assuming a substantial part of your first $1 million came from investing. If that’s correct, a word of caution: The stock market returns we’ve seen since March 2020 have been unlike anything even seasoned investors have seen in their lifetimes. Making your next $1 million could take significantly longer. If you’re among the many young people who made eye-popping fortunes on highly risky investments, like meme stocks or Dogecoin, understand that today’s $1 million could be worth far less tomorrow.

Once you have a solid financial plan in place, it’s natural that you’ll start to upgrade your lifestyle a bit. Your parents will be able to conclude that you’re doing well if they see you buying a nice house or taking expensive vacations. This will be more of a gradual progression than an overnight change if you’re handling your money responsibly. If your parents ask questions, you can share as much or as little as you want.

Ultimately, the conversation you need to have with your parents isn’t about your financial situation. It’s about theirs. Try talking to them about how prepared they are for retirement. If you sense that they’re woefully unprepared, you aren’t expected to cash out all your investments to come to their rescue. At some point, though, you may want to start setting aside some money so you can help them out if necessary.

At 22, the best thing you can do with $1 million is to buy yourself freedom, not stuff. Life is a lot richer when you can make decisions based on what you want instead of how far you can stretch your paycheck.

Hitting $1 million is a huge win, but it’s also somewhat arbitrary. Try not to hinge your entire identity on being a millionaire. Focus on your big-picture goals instead of what your net worth is on any given day.

Robin Hartill is a certified financial planner and a senior writer at The Penny Hoarder. Send your tricky money questions to AskPenny@thepennyhoarder.com.

This was originally published on The Penny Hoarder, which helps millions of readers worldwide earn and save money by sharing unique job opportunities, personal stories, freebies and more. The Inc. 5000 ranked The Penny Hoarder as the fastest-growing private media company in the U.S. in 2017.