This is part one of a four-part blog about the, sometimes devastating, consequences of overnight wealth.
The impact of sudden wealth is a four-part blog post about the implications of becoming rich overnight. An inheritance. The successful sale of a company. Landing a new high-paying job. Exercising a stock option. A lotto bonanza. What seems like a gift can, all too often, turn to ashes. We’ve all read about it, the insidious effect of overnight prosperity. A couple wins the lottery, spends freely, and declares bankruptcy two years later.
The impulse to spend
Perhaps the single greatest weakness of mankind – and womankind – is an inability to resist purchasing things. If not held in check, spontaneous spending when suddenly wealthy is a recipe for disaster.
In this series I plan to look at what, for want of a better descriptor, can be called the sudden wealth syndrome. Symptoms of this condition include, of course, the urge to spend.
But they also encompass voices out of the past (people with whom you lost touch
but now want to become friendly again because they’ve heard you struck it rich), loss of anonymity, the investment trap and what I call the when charity becomes uncharitable condition – a temptation to give freely and indiscriminately to (apparently) worthy causes.
Failure to plan means planning to fail
The impact of sudden wealth highlights one of the oldest adages in wealth management: failure to plan means planning to fail. This means that if you don’t have a wealth advisor, get one.
Or, if you have a trusted advisor, go see him/her pronto. Lay out the facts. Discuss the scope of the challenge. Roll-up your sleeves. Get to work. Most important of all: resist the urge to spend. You have plenty of time for that.
Your relationship with yourself
I’ve saved for last the most potentially insidious effect the impact of sudden wealth can have on anyone afflicted – and, yes, it can be an affliction – with overnight prosperity: your relationship with yourself.
Getting unglued is all too easy and the potential for personal impairment that sudden wealth brings is unlimited.
You must come to terms with yourself in the event that you enjoy the benefits of sudden wealth or you will surely live to regret it.