Weathering A Financial Windfall
By Evans Attwell
Senior Vice President
Frost Private Banking
It seems like the kind of dilemma we would all like to have:
Deciding what to do with a significant sum of money that drops in our lap out of the blue. Whether it comes by way of an inheritance, the sale of a business, a legal settlement, a generous gift, or some other fortuitous event, most of us are quick to imagine that a big payday could solve all our problems and unlock the door to a life of happiness and dreams coming true.
Separate fantasy from reality
Trouble is, reality isn’t nearly as good as fantasy, say financial advisors. Their experience helping clients who suddenly find themselves with new and potentially life-changing wealth tells a different story.
Instead of the expected elation, the recipients of sudden wealth often feel overwhelmed. And depending on how they received the money, they may feel dazed, sad, scared—“I’m afraid I’ll do the wrong thing with this money”—or guilty—“I have this good fortune only because someone died.” New pressures and expectations can create more problems than they had before.
In fact, the darker side of financial windfalls has triggered a new psychological term, “sudden wealth syndrome,” coined by therapists to describe wide-ranging issues, such as feelings of isolation and anger, broken relationships, and self-destructive behaviors.
Take your time; make a plan
Stories of the newly rich who spiral out of control and squander their wealth are cautionary tales. But if a financial windfall comes your way, good strategies exist to help you avoid their mistakes and manage the good fortune that has come your way.
Instead of impulsively spending money for immediate gratification, take a deep breath, think ahead, spend time planning, and consider all the positives and joy that this money could give you in the future.
• Take a money break. Don’t rush into anything, don’t let yourself be pressured by anyone, no matter how well-intentioned they seem to be, and resist the urge to splurge. There is nothing wrong with letting your money sit in a bank account until you get your emotional bearings.
• Build a team of trusted financial professionals—including a banker, wealth advisor, CPA, and attorney, who have your best interests at heart—to advise you about tax obligations, help you figure out what you want to accomplish with your money, and work with you to create a plan for saving and investing that enables you to pursue your goals.
Would you like more information?
Contact Evans at 713.388.1367 or
evans.attwell@frostbank.com.