Whether it comes via a lottery win, inheritance or selling a business, landing a windfall can be a life-changing event. But it also can leave you stressed and unsure how to handle the money.
In addition to emotional stress, receiving a sudden wealth can lead to a host of financial and legal issues. For this reason, it’s best to assemble a team of professionals to help you navigate the windfall.
Keep It Quiet
Getting a sudden wealth after a jackpot is a wonderful feeling, but it can be overwhelming. It can make you feel stressed and anxious, which is not healthy.
Keep your new wealth a secret for the best results, advises financial planner Robert Pagliarini in Forbes magazine. It can help you avoid becoming a target for swarms of people, including friends and businesses, seeking a piece of your fortune.
Keeping it quiet also helps you preserve family relationships and friendships, he says. It is especially important to keep your winnings secret from children, as they may be spoilt if they know about the money.
Don’t Spend It Quickly
There are many ways to be rich, from winning the lottery to inheriting a fortune to selling a business. While all of these occurrences can boost your finances, they also present their own unique set of challenges and pitfalls.
The good news is that there are numerous tools, tricks and tips to help you navigate these challenges. It’s not all doom and gloom, but the best way to handle sudden wealth is to be prepared for what comes your way.
For starters, don’t just grab a wallet – take the time to create a spending plan. While this may be a daunting task, it’s also an opportunity to take stock of your current financial situation and decide what needs to change. The goal is to make sure you never lose sight of your short and long term goals while enjoying your newfound riches.
Make a Spending Plan
A spending plan is a tool to help you track and categorize your expenses, and make better financial decisions. It can also be a good way to set priorities and achieve bigger financial goals like saving for retirement, paying off debt or investing.
When making your spending plan, you should consider both fixed and variable costs. Fixed costs are usually the same every month, such as rent or car payments. Variable costs, on the other hand, will change from week to week or month to month.
You can use a spreadsheet or money tracker to keep track of your spending and create a plan for how you’ll allocate it. This will allow you to set reasonable limits on your spending, which will help you feel more in control of your new wealth.
Don’t Make Promises or Commitments
When it comes to managing sudden wealth after a jackpot, it is important to remember that it can be a major shift. Whether you have just won the lottery, received an inheritance, inherited your business, sold a property, landed a legal settlement or insurance payout, it is crucial to take your time and make sure you understand how to best manage the new amount of money in your life.
One of the biggest problems that people encounter when dealing with sudden wealth is making promises or commitments to family members and friends. These promises can be hard to keep, as you will have a hard time saying no to requests from loved ones who want to pay off debts or buy them new homes.
Getting an unexpected windfall is exciting, but it can also be overwhelming. Often, newly rich people experience a feeling of guilt and remorse for their financial situation. They feel like they don’t deserve the money and are worried that their newfound wealth will disappear as quickly as it came. This can cause them to do things that damage their finances or their relationships with others.
To prevent this from happening, make sure to remain social as much as possible. Gestures such as treating your friends to a trip can help them understand that you aren’t only interested in them because they have money, but because you care about them and want to spend time with them. Keeping your newfound wealth private will also help.