Nothing compares to the sensation of receiving an unexpected windfall of cash. When the sums are six, seven, eight digits or higher, the thrill is increased. Of course, the more money you receive, the more stressed you will be. In truth, “Sudden Wealth Syndrome” is the name of a stress-related illness.
Fortunately, if you get sudden wealth then below are the sudden wealth planning tips to help you safely maintain and increase your money, regardless of whether you recently signed a multimillion-dollar contract or won the lottery.
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Your Lawyer
Your lawyer assumes responsibility for defending your best interests and can handle the numerous complex issues that frequently come with sudden wealth in an unbiased and unemotional manner. A competent attorney can also set up philanthropic intentions like a family foundation or donor-advised fund as well as prepare or revise your estate plan. Your attorney may also provide insightful advice on any difficult choices you may need to make, which can eventually help you save time and money.
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Develop a Comprehensive Financial and Life Plan
Pick a team of advisors that have a lot of experience working with people and families in situations that are comparable to your own. This knowledge will come in handy as you start your financial planning.
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Be Wary of Friends and Family
Unfortunately, new acquaintances and alienated family members can appear as a result of your newfound income. This commonly happens to lottery winners and athletes. It is extremely typical for athletes’ advisors to pay the athlete a wage and instruct the player to address all financial inquiries to the advisor. This can be a smart move because it creates some distance between you and a friend or family member.
Additionally, based on the quantity of your new money, you can be the target of pointless legal actions and threatening statements. Your family’s and your safety will become highly important, along with your wealth.
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Resist Making Large Purchases
This essentially means resisting buying into the situation’s inflated importance. Pay your bills off, take a little trip, and take care of your taxes on the gain, but don’t make too many adjustments at once.
Consult your qualified staff. Take the time to reflect on your good fortune and your role as a steward of the wealth, and by extension, your responsibility to leave a legacy that includes money but also includes much more, to the next generation or charity, if the amount you have received is significant in comparison to your previous situation (for example, invested at 3% per year, the annual return covers your dream standard of living and then some).
- Promising anything or making commitments
Making any financial or non-financial obligations is premature if you recently learned that you will be getting money. Promises to friends and relatives should not be kept. Once more, it’s too soon to know how much money you have and how much you can spend.
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Build Out Your Financial Plan
The truth is that preserving your improved financial situation calls for careful planning. The key components of a thorough financial plan are identifying your top priorities and setting clear targets.
Financial planning is more than just math; it’s about living your life and achieving your objectives.
