"How to Handle a Financial Windfall" at SIBL on August 8, 2017

sudden
Money Changes Everything

Winning the lottery is what everyone dreams of, right? It can be, but personal safety and security concerns and the anxiety of a significant life change can beset anyone who comes into sudden money. I was thrilled to have the opportunity to attend this very important talk at the Science, Industry and Business Library to learn more about adjusting to such a major event. (After all, who knows, it might happen to you.) Anja Luesink, a Certified Financial Transitionist, amongst many other things, gave the talk, which was very enlightening.

Money can expand your opportunities. If you receive sudden money, you can use your newfound resources to help achieve life goals. You can learn how to manage it well and not spend frivolously. Unfortunately, 80% of lottery winners squander their money within five years. Financial planners can help you with this task. SIBL offers free personal financial planning sessions, but you can also search for a Certified Financial Planner (CFP) at a private financial firm. 

Having money comes with responsibility. Many people will come to you asking for money. You may want to take vacations, move into a better house, help relatives, give money to charity, go back to school, take a job that pays less money, retire early, etc. Also, be aware of people that might want to steal your money or resources. This is a big life change, and big changes can bring stress. Also, the reason for coming into money can be a stressor. Many heirs are grieving the loss of a loved one, often a spouse. Many people lose friends and relatives after they acquire money. If you win the lottery, copy the front and back of the winning ticket, and put the ticket in a safe deposit box.

A Major Life Change

Luesink advises making no decision about the money for one year. It can take awhile to assess your options and "test drive" different scenarios  in order to determine if certain choices are feasible for your entire life span. You can have anything but not everything. Choices need to be made. The financial planner usually calculates with her clients annual expenses associated with their financial plans until the age of 97. People can live that long. Although she would like to calculate until age 100, that makes clients a bit queasy. Save money for unforeseen events and financial emergencies that could occur. For example, long-term care can be very expensive. You want to make sure that you have money for everything that you might need for your entire lifetime. 

Saying No to Requests

It can be helpful to create a written statement that you can use to respond to requests for money. The names of lottery winners are made public, which can be a really bad thing for the winner. In that case, everyone knows that you have acquired sudden wealth, and they want a piece of it. Relatives, friends, religious affiliates, even people that you never met will likely be asking you for money. Do not give anxiously or if you are not comfortable. Tell people that you are adjusting to this major life change and taking time to assess your goals before responding to any requests. Polite, professional written communication is a soft no. If you decide to give later, you can give with peace of mind, knowing that you have carefully assessed the options and that you can afford it.

Personal Financial Planners

Just like receiving an annual medical check-up, it is important to reevaluate one's finances at least once a year. People's lives, goals, and financial situations change continuously. Therefore, it is important to look over one's budget, income and expenses, and ways in which one wants to save and spend. I like to review my finances semiannually. It really gives me a picture of where I am in terms of achieving my retirement savings goals. Personal financial planning should be taught by schools and colleges because financial literacy is alarmingly low in this nation.

 

I have never seen a lecture on this topic at SIBL, and I learned much.

 

Books on financial literacy

Books on sudden money 

Financial Industry Regulatory Authority

Free personal financial counseling at SIBL

National Endowment for Financial Education

U.S. Securities and Exchange Commission

 

Comments

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Very important subject.

Very important subject. Experienced by lottery winners, professional athletes, people receiving inheritances, inventors, and others. Good to know about this resource.