Money Tips

How To Manage Sudden Wealth

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You’ve heard stories of people having sudden wealth such as winning the lottery or finding out they have a relative who has left an inheritance or some huge financial asset for them. But what if it was you this time, not just stories but your reality? 

Having sudden wealth is a good thing. Yes, the euphoria is unexplainable. But knowing how to manage this wealth needs careful consideration so you don’t go back to the trenches. This is what this article wants to prevent, to help you stay wise and live a responsible, wealthy life. 

Five Tips to Manage Sudden Wealth

1. Keep it on the low

Never let your first instinct be to tell people. If it lies in your hands, do not make the news of your sudden wealth of public information. The last thing you want to do is draw unnecessary attention to yourself. You don’t want to start receiving threats, blackmails, unwanted familiarities, or experiencing insecurity issues. 

Even if they don’t have sinister motives, people will try to give tips on how to manage this newfound wealth, and it’s easy to get lost in the noise. So, keep it lowkey. Keep it to yourself until you’re in the right frame to share the news with only people who matter to you. Prioritize your privacy and stay streetwise. 

2. Leverage the expertise of professionals 

Sudden wealth is what it is in the real sense of the word – sudden – albeit to you. Wealth managers have years of experience managing huge funds, and it’s from them you need advice. They will help you navigate this new life and wade off any financial or legal issues you’ll most likely encounter. Be cautious in your search for good accountants. Make your findings, and you can go as far as interviewing them. 

3. Settle all debts

Most professionals will recommend paying off your debts as one of the first moves you should make. This should be the first and only expense you should embark on. Fully enjoying your wealth means you have no backlog of debt, loans, mortgages, etc., that is pending, so be sure to remove the obstacles first to enjoy a debt-free life. Also, avoid creating new debts because you feel money is no longer an issue.

4. Set a life goal

This is a goal of how you want to spend the rest of your life. This is why consulting experts is important. This is necessary to decide the standard of living you’ll like to live by and what kind of income you hope to maintain. This will determine your short and long-term goals, business goals, retirement goals, and perhaps charities you’ll like to donate to and other several causes. 

5. Financial literacy

You know the popular saying, “A fool and his money are soon parted.” It applies in this situation. If you didn’t care much about understanding money, you need to care now. Learn before you spend. You can lose money as quickly as you gained it. 

So instead of planning a boat cruise, invest in financial education. You can start with business classes or courses, seminars, or reading books for starters. There’s so much to learn, and you can become even wealthier with the proper financial knowledge. 

Learn before you spend. You can lose money as quickly as you make it.

Common Financial Mistakes

  1. Getting rid of your old life for a “richer one”
  2. Investing in your friend’s business or lending them money 
  3. Immediately starting a business without having previous business experience 
  4. Paying every bill and making large purchases 
  5. Letting it get into your head 
  6. Not having a plan
  7. Investing in shady businesses and schemes 
  8. Quitting your job immediately 
  9. Not setting up trust funds for your kids

Bottom Line

Frankly, sudden wealth is rare to come by, so if you find yourself in this fortunate position, be careful and maintain balance in your life. Remember that the best way to grow money is making good money decisions that will benefit you and your family for the rest of your lives. It’s natural to experience some anxiety or rush after becoming suddenly rich. Don’t let it get into your head; choose to make smart decisions. 

Related Posts:

How to Build Generational Wealth

Escape Generational Poverty

8 Money Management Tips

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