Jun 29, 2018
Pattie Lovett-Reid: What to do when you strike it rich
The remaining Unrestricted Free Agent (UFA) class in 2018 offers a handful of high-impact players in the NHL looking for a new home – and you can be sure there will be some coming into a huge windfall of money along with a new home team.
But you don’t have to be a hockey player to become subject to “sudden wealth syndrome.” A financial windfall, whether it comes from an inheritance, a divorce settlement, or a lottery win, can cause a sudden life transition for individuals.
Sadly, the reality is most people are ill-equipped to deal with the emotional stress and life changes that come along with a sudden influx of money. Money changes are life changes and life changes are money changes, and most sadly aren’t equipped to deal with the huge change. We hear all too often about how large sums of money can destroy relationships and mindless spending leading to financial ruin.
Money is emotional and it is imperative you get your emotional house in order to adequately deal with your new financial house.
Tips for managing a windfall:
1. Figure out exactly how much money you will have coming your way in after tax dollars. Understand if there are any strings attached to ensure you are very clear on where you stand financially.
2. Don’t go it alone. Reach out to professionals that you trust or have been referred to by someone you trust. Validate their credentials to ensure authenticity and look objectively at their track record.
3. A windfall can literally be life changing. Now is the time to develop a financial plan and as important a life plan. This is so much more to a windfall then the financial element. Sure the money matters but your lifestyle will drive your overall success.
4. Be very wary of friends and family who come calling. Sadly, it is likely to congratulate you. Athletes and lottery winners become very popular very quickly. And on the flipside, you may find yourself on the other end of frivolous litigation.
5. Spend some money, save some money, and give some money. No one expects you not to spend money when a windfall comes your way; however, try to resist big expenditures until you fully understand what you can and cannot afford.
It is an amazing feeling to come into an unexpected sum of money but with big windfalls comes stress or “sudden wealth syndrome”.
Take the time to breathe, reflect and build a plan so your good fortune doesn’t leave you worse off than you were before.
