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We are an independent, advertising-supported comparison service. Our goal is to help you make smarter financial decisions by providing you with interactive tools and financial calculators, publishing original and objective content, by enabling you to conduct research and compare information for free – so that you can make financial decisions with confidence.
Our articles, interactive tools, and hypothetical examples contain information to help you conduct research but are not intended to serve as investment advice, and we cannot guarantee that this information is applicable or accurate to your personal circumstances. Any estimates based on past performance do not a guarantee future performance, and prior to making any investment you should discuss your specific investment needs or seek advice from a qualified professional.
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People can sometimes become wealthy overnight after not having much wealth previously. While such a rapid increase in wealth can drastically improve a person’s life, it can also be an enormous source of stress, anxiety, and confusion.
This is known as sudden wealth syndrome, and it’s not uncommon for those who suddenly become wealthy to have these feelings. But with proper planning and the right approach, it’s possible to avoid sudden wealth syndrome.
Sudden wealth syndrome, also known as sudden wealth fatigue, is what people sometimes experience after coming into a large sum of money. That could be the result of an inheritance, a lawsuit, lottery winnings or some other means.
This large influx of money can cause people to have feelings of anxiety and the fear that they are going to lose their money. People in this position may also be treated differently by family and friends from how they were before they became wealthy. Those close to them may ask for money, become jealous, or even alienate the suddenly wealthy person.
While sudden wealth syndrome is a real problem for those who quickly become wealthy, it’s possible to lessen or avoid its effects altogether.
If the money now in your possession is a large enough sum, it might attract a lot of attention. However, that is only the case if you tell people about it. You might decide to tell a small handful of people you know you can trust, and it can be exciting and enjoyable to do so.
However, advertising your new riches on social media and boasting about it to distant acquaintances may result in a lot of people being envious of your money. Worse still, it can lead to jealousy or even resentment. While it might be tempting to tell everyone you know about your windfall, it is best to tell only a handful of close confidants.
If you suddenly have a large amount of money, you might think you have to do something about it immediately. But emotions will probably be running high at first, and that could be a problem. Acting too quickly could result in ill-advised choices, such as going on spending sprees or investing your money in risky assets.
In reality, it isn’t necessary to do something with your money the moment it’s in your possession. Take a few days (or a few months) to breathe. This is perfectly normal and will allow you to clear your head a bit.
One thing you shouldn’t put off, however, is meeting with a tax professional. If you have acquired a sum of money that is much larger than anything you’ve ever had before, you may not know what you owe to the government and how to handle your tax liability. A tax professional can help you answer these questions so you don’t pay too little in taxes – or too much.
You should also talk with a wealth advisor after receiving your windfall. An advisor should have plenty of experience working with wealthy clients and thus know exactly how to handle the money, including which investments to make, how to establish a trust and how to set up charitable contributions. A wealth advisor can help you create a plan that makes the most sense for your situation.
Here’s how to choose a financial advisor who will work in your best interest.
You should also set financial goals you want to accomplish with your new wealth. A wealth advisor can likely offer guidance here, but you should also decide what is most important to you. For example, you might want to pay off debt, save for a house, or invest in a child’s education fund. Or maybe all three. Once again, just how large the windfall is will help determine the scope of your goals.
You’ll also need a plan to help you reach those goals. For example, perhaps every month you’ll decide to pay X number of dollars toward your debt. This will help keep you on track and make sure you achieve those financial goals.
Mental health issues can sometimes be stigmatized, but therapy shouldn’t make us ashamed. We all process emotions differently, but sudden wealth syndrome can create emotional turmoil for some people. If your windfall is regularly keeping you up at night, it may not be a bad idea to consider therapy. Therapy can help you process your emotions and understand why you are feeling the way you are. Different types of therapy work for different people, but it may be worth considering if your newfound wealth is putting you through significant emotional stress.
The prospect of suddenly being much more wealthy than you were before should be an overwhelmingly positive one. And yet all too often a sudden windfall can be a source of serious emotional distress for a lot of people. However, it doesn’t have to be that way.
Keeping it (mostly) under wraps, meeting with professionals, and setting financial goals are some of the steps that can help keep you grounded. With the right approach, it’s possible to avoid sudden wealth syndrome.
Bankrate.com is an independent, advertising-supported publisher and comparison service. Bankrate is compensated in exchange for featured placement of sponsored products and services, or your clicking on links posted on this website. This compensation may impact how, where and in what order products appear. Bankrate.com does not include all companies or all available products.
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