You would think that unexpectedly coming into a lot of money would make you incredibly happy, but this isn’t always the case. Overnight wealth can be a shock and, for some people, very distressing. Learning to deal with sudden wealth syndrome can be particularly difficult for people who grew up in financial instability.
What is sudden wealth syndrome?
Sudden wealth syndrome is a name used to describe the distress some people experience when they become suddenly wealthy. This could be because they won the lottery, received an unexpected inheritance, or received a significant insurance payout. In more recent times, it could also be the result of trading in cryptocurrencies such as Bitcoin.
What are the signs and symptoms?
Before you can deal with sudden wealth syndrome, you need to recognise it. Because it’s uncommon and can manifest in many different ways, it can sometimes be tricky to figure out.
In some people, it appears as a need to isolate from loved ones and feelings of guilt or shock. In others, it might feel like paranoia or distrust as you think others are now treating you differently.
According to Investopedia, not knowing how to deal with sudden wealth syndrome can affect decision making. For example, some people might make rushed decisions for fear of losing their money while others might start spending on expensive items without even thinking. These reactions are often a result of shock.
How can I manage sudden wealth syndrome?
If you’ve come into a lot of money suddenly, you need to take some time to figure out your next move. Experts recommend keeping the money news to yourself for a while or maybe just sharing it with a select few. You don’t need the pressure of being asked to share or the unsolicited financial advice.
Beyond this, consider the following three tips for dealing with sudden wealth syndrome.
1. Don’t rush into any decisions
If you don’t know much about finances, seek out a qualified financial advisor to guide you. Don’t invest, save or make big purchases without some proper advice.
2. Figure out what you want
You probably want to save and invest, but do you have specific goals in mind? Do you want to invest in real estate? If so, would you want to move and buy properties in different areas? What about charitable donations – do you have a passion you can focus on?
A good way to deal with sudden wealth syndrome is to figure out where to put some of it away for the future. Options include building a pension fund and putting away some university savings for the kids.
3. Don’t think wealthy now means wealthy forever
Sit down with your financial advisor and figure out how much money you truly have to spend on a monthly or yearly basis without throwing it all away.
If you start spending without truly understanding how much money you have – a common compulsion with sudden wealth syndrome – you could soon find yourself without any.
Tempted by high-price items you never thought you’d be able to afford? Be sensible and figure out which one pulls at your heartstrings most. Take some financial advice and consider buying just that one, whether it’s a property, a car or something else. Then work out a budget to live on from then on. This is the best way to ensure your newly acquired fortune lasts.
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