Whether you have hit paydirt with a successful business, made some wise choices in life, or just won the lottery, becoming rich almost overnight is, for many people, a dream come true. All of a sudden, you picture yourself traveling the world, and living an amazing life. We have to remember that, when this dream actually comes true, it may throw up a heap of other concerns. Becoming newly wealthy, sometimes known as Sudden Wealth Syndrome can be detrimental, but this means you have to know how to deal with it. How can you deal with striking it rich all of a sudden?
Don’t Make Rash Decisions
Anybody who has suddenly come into money will decide they want to buy everything they’ve ever dreamed of. You might consider buying a 15-bedroom mansion, but the important thing to remember is that you shouldn’t rush any decisions. You need to know exactly how much money you have, and how much you can afford to spend. They say you should spend your first few weeks or months after becoming wealthy in a “decision-free zone” as this helps you to process any feelings before you decide to take action.
Keep Your Wealth Quiet
If you suddenly come into wealth after years of financial struggle, you will see people coming out of the woodwork. If your friends, all of a sudden, notice that you’ve started to invest in beachfront real estate and are dressing differently, you will face pressure from the people that demand their piece of it. On the other side of the coin, there are people who will try to offer financial advice.
However, you can sidestep all this pressure by keeping it quiet. Sudden wealth is overwhelming, and when people discover you have a significant amount of money, all of a sudden, people will come knocking at your door.
Work Out How Much You Really Have
It can be surprising how much you actually have. Before you start to put your money to use, you need to see how much is yours. For example, winning the lottery doesn’t necessarily mean winning an even $1.5 billion lottery jackpot. After taxes, it could be significantly less. If you inherit money, they may be limits on how you can use it. While on paper, you may be a millionaire, you need to know exactly how much is yours.
Hire a Professional
It is impossible to have a substantial amount of money in a traditional bank account. When you set out your specific goals, you need to work out how much money goes towards each one. When you consider long and short-term goals, such as retirement, lifestyle, and donations, the next step is to hire a financial advisor.
A financial advisor worth their salt will help you understand how much you can afford to spend every year to make your money last, but will also point you in the direction of worthwhile investments. The important thing to remember at this stage is to speak to people you trust.
There are many stories of fraudulent and underhanded financial advisors in the world. Take the opportunity to vet every candidate, research their background, and their ethos. When you find a financial advisor that you can trust, it is invaluable.
Be Aware Who You Lend Money To
If people come looking for handouts, and you give hundreds of dollars away like it’s chump change, they will keep coming back. It may be awkward to refuse money to friends or family. But this is where an advisor can help. An advisor can give you solid financial advice so you know if it is valid and worthwhile. It also helps you to keep your guard up. If people constantly ask you for money, this is very stressful. You may find charities are trying to squeeze money from you in any way possible, which can include threats or lawsuits. Having an advisor shields you from all of this.
Limiting Your Own Access
If you know how much money you have, you may not be able to resist spending thousands of dollars here, or a million dollars there. But as the cliche goes, it all adds up! The best thing you can do if you cannot resist splashing the cash is to put it into accounts that you cannot access. For example, you could put money into college saving funds, or buy a house with cash.
Getting Used to Your Lifestyle
Many people think that, when they become rich all of a sudden, they do not like what it brings. This is likely because of the sudden change in absolutely everything. You don’t need to necessarily think of yourself as a rich person, but you can now live a comfortable lifestyle. Many people who have experienced feast or famine when they run their own volatile business say that their lifestyle stays the same, but the products they buy are relative to the money they bring home.
In other words, you either buy a top-of-the-line Rolex watch or stay in the Four Seasons Hotel or get a watch from a flea market and stay at the YMCA! When you have a new income level, it’s important to work out what your money can buy you in life. You have earned the right to splurge on a new car and nice things but get the balance right. Living sensibly on your new income is far more rewarding than being able to buy whatever you want, whenever you want.
As you can see, becoming wealthy all of a sudden might be a shock to the system. It’s about protecting yourself financially, as well as emotionally. When you become rich all of a sudden, people lose their sympathy for you. If you’ve been struggling all this time, one of the biggest things people don’t talk about is how stressful it can be. It is important to acknowledge that it can be a source of stress.
But you should not get embarrassed about admitting it. The great thing about having more money is that you have access to a wider variety of resources, like therapists. People may think that you are being obnoxious because you have problems most people don’t, but if you are to make the most of your new-found wealth, make sure that you look after yourself.