Dealing with New Wealth
a guest Aug 1st, 2017 63 Never
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- Here are some suggestions if you *do* happen to come into a large sum of money, and don’t know how to feel about it or what to do. This advice is specific to someone who inherits money, but most it applies if you receive a windfall from some other source, like a lottery or gambling, too.
- 1. First and foremost, relax. Don’t feel the need to do anything just yet. Action right now is a mistake, you’re still dealing with this new development and rushing to act will almost certainly lead to poor decisions. There’s no hurry, you can take some time to deal with this mentally before you deal with the practical aspects. In fact, it’s a good idea to let everyone around you know that you’ve put the money into a trust or dealt with it in some way that makes it inaccessible to you for six months. Even if you don’t do this (but it wouldn’t be a bad idea), tell people this so that they don’t start coming to you with their hands out. Tell them you aren’t against helping anyone, but that you need time to figure things out and don’t want to make rash decisions. It’s also a good idea to ask the lawyer who handled the probate of your relative’s estate for their recommendations on wealth management services. There are firms who do only this, and they can advise on everything from investing to taxes to how to hire other people to help you. You shouldn’t expect to handle this alone.
- 2. Don’t quit your job or change your life dramatically right away. You are the same person as you were before this came into your life, having more money now doesn’t change that. The happiest lottery winners are those who still go to work every day and who don’t change their life dramatically. Don’t let this new windfall own you - it has no power to change you or your life, that power is still yours and you can choose to carry on as you were until you’re sure about any changes you want to make. Spend some time reading about how to handle sudden wealth. There are scores of books published on this subject, from people just like you.
- 3. Think of your new resources as simple the tools they are. Imagine this analogy - if you were a carpenter, and you were suddenly gifted with a whole new workshop full of shiny new woodworking tools, you wouldn’t feel miserably compelled to go out there and start using all of them right away. You wouldn’t feel guilty about not using them immediately, and you wouldn’t let their presence force you to go out and make something with them. Money is just a tool. It’s there to help you do the things you want, nothing more. So don’t feel compelled to do something with it just because it’s there.
- 4. This applies especially if you’re young. It’s easy to think about buying toys or quitting work, but ask yourself if you want to be financially stable 60 years from now. This goes back to the need for wealth management - make sure you don’t just live for today and end up blowing it all before you’re 30.
- 5. Once you do start to figure out what you want to do, don’t be afraid to move slowly. If you want to quit your job, fine, but don’t suddenly move out of your apartment and move to a new country and buy a property and furnish it, etc. Do one thing at a time, and let yourself adjust. Make sure each step feels right and comfortable and sensible.
- 6. Definitely consider the charities or causes you want to support, but also consider investing in small businesses you support or want to see succeed. There are entrepreneurial sites for people needing funding to launch a new product or service, and they could use benevolent investors to help them innovate and bring amazing new things into the world. Consider becoming a micro-loaner - again, there are sites for this. Loaning someone $500 may not feel like much to you, but it could make all the difference to them. With friends and family, consider not just giving them money but doing things like paying off their student loans or mortgages for them. It will help them a lot more than just giving them cash will.
- 7. When you’re ready, enjoy yourself. Travel and see the world, experience new things. Feel gratitude to your relative who worked hard to allow you to have this experience. Imagine how you’d feel if you wanted to leave money to a beloved relative - you’d want them to enjoy the money and their life. Don’t feel guilty about it - if you’ve done all the things I’ve just mentioned, you’ll have dealt with your new windfall responsibly and probably invested in other people and given to charity. Everyone wins.
- But most of all, please just relax for now. This shouldn’t be a burden or something that worries you. Take a deep breath and use this time to really think about what you want - for yourself, for your friends and family, and for the world. You’ll do fine.
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