We have those moments we daydream about what we would do if we won the lottery.
If you are reading this article, this dream may now be a reality, or you have come across a large amount of money, maybe from a court settlement, stock market gains, or a big sale. However, if you are anything like the majority of suddenly wealthy people, this windfall might dissipate in no time, leaving you broke.
According to this report, many Florida residents who won lotteries between $50,000 and $150,000 filed for bankruptcy within five years. Fox Business also reports that 78% of professional athletes with previously lucrative contracts went broke just three years after retirement.
To avoid being part of such unfortunate statistics, you must consider wealth planning.
This article focuses on how to manage sudden wealth, sharing tips that future-proof your newfound riches.
But first…
Table of Contents
What is Sudden Wealth Management?
Sudden wealth management is one of the many forms of financial planning that focuses on helping people handle sudden wealth wisely.
It involves working with a financial expert who will help you make informed investment decisions, eliminating the risks of going broke later in life.
What is the Sudden Wealth Syndrome?
This psychological condition affects people who have come across large sums of money overnight. It is characterized by stress, isolation from friends, adjustment issues, anxiety, and extreme fear of losing their fortune.
To eliminate the risk of mismanaging your windfall as a result of sudden wealth syndrome, it’s essential that you speak to a financial advisor.
7 Essential Steps to Deal with Sudden Riches
So, what to do when you come across a windfall?
- Take time to process the unexpected change in status
Various emotions come to play when you suddenly become rich. Feelings of guilt, for instance, may engulf those that receive the inheritance as a result of the death of a loved one. You may also experience excitement, fear, anxiety, stress, and paranoia, emotions that can trigger you to make impulsive decisions.
So, if you have recently come across a sudden large amount of wealth, take time to process your emotions. Otherwise, you risk making not well-thought-out decisions.
- Hire a money coach
Before you invest your money or make purchases, talk to a sudden wealth advisor. Leveraging their expertise, these money gurus will advise you on viable investment options depending on your risk tolerance and how each will impact your future, even after retirement.
- Consider tax implications and liabilities.
Your windfall is subject to tax liabilities, and it’s important to know what you owe Uncle Sam before spending any of it.
For instance, lottery winnings are subject to income taxes, while a person who receives an inheritance may need to pay estate taxes.
And that’s not all.
People who receive profits from the sale of stocks or a business have other taxes they must pay, complicating the situation even further.
However, partnering with an instant wealth advisor uncomplicates the situation as they will implement surefire strategies that preserve your riches while ensuring you remain tax compliant.
- Develop a robust financial plan.
A comprehensive financial plan is crucial if you become a millionaire overnight. It evaluates your current financial situation, helps you set smart money goals, pay debts, and plan for retirement.
A financial advisor experienced in windfalls is integral in this process. They will guide you through creating and solidifying this plan to protect your fortune.
- Resist the urge to splurge
Of course, spending temptations can be overwhelming when you get rich overnight. So while you may want that powerful German car that costs a couple of thousand dollars, it’s wiser to plan your retirement strategy and make smart money moves that sustain you for a lifetime.
However, you can create a budget that caters to the few nice purchases you desire. Just make sure your budget stays on track, and plan for the purchases beforehand.
- Be cautious of relatives and friends
It’s common for friends and family to develop sudden money needs after you receive a windfall. But, if not well handled, these seemingly ‘urgent’ calls for financial help might run you dry or mess up your goals for financial stability.
For this reason, it’s vital to seek expert help in dealing with such money requests. Ask your loved ones to channel their needs to your advisor. This will minimize unwarranted money demands, allowing you to care for them without jeopardizing your future.
- Monitor your Money and Properties
A long-term strategy to deal with sudden wealth is to schedule periodic visits with your advisor. During these meetings, review your overall financial health, scrutinize your investments, and adjust your goals to emerging money-making opportunities.
Do You Need Wealth Management Planning Help?
We are Interactive Wealth Advisors, fiduciaries, and financial experts offering sudden wealth management in Portland, OR. Whether it’s a business sale, large inheritance, stock market profit, lottery winnings, or lawsuit settlement, we will help you manage wealth by creating clear plans that safeguard your recently acquired fortune.
As for athletes and entertainers that have signed a major contract, our team of fiduciaries and financial experts will work out the ideal sudden wealth solution for your unique situation, growing your money and transforming it into lasting riches.
Contact us today to speak to a windfall or retirement planning advisor.
