You’d be likely to feel happy and excited if you received a large windfall suddenly or unexpectedly. Whether you’re receiving an inheritance, have become a successful entrepreneur, or perhaps you’re selling your business, the reality is that for many, sudden wealth can feel overwhelming.
It can even result in a recognised psychological condition called ‘Sudden Wealth Syndrome’. Symptoms vary from person to person, but can include feelings of isolation, uncertainty about the future, or fear of losing their new-found financial stability.
Adapting to a new financial status can lead to poor mental health and even result in self-destructive behaviour, such as excessive spending or risky investments. Unfortunately, news stories about people who won millions in the lottery before losing it all, or getting into debt, are all too common. Our mental state has a significant impact on how we handle our money, in fact 46% of people who struggle with debt were found to have a mental health issue1.
How to avoid the negative impacts of sudden wealth
Although we can’t avoid all the negative feelings associated with sudden wealth, there are things we can do to safeguard our finances:
- Don’t act in haste – take your time before making any decisions. In the meantime, put your windfall into an easy-access savings account(s), within Financial Services Compensation Scheme limits, where it can accrue interest
- Stay under the radar – Sudden Wealth Syndrome can lead to anxiety and paranoia that people only like you because you have money, so by keeping things discreet, it will help alleviate these feelings and assist clear decision-making
- Take professional advice – investing or spending large sums without advice can be catastrophic for your finances. It’s vital to take professional investment and tax planning advice.
To ensure your new-found wealth works hard for you and your family, we’re on hand to help you make wise decisions.
1Money and Mental Health Policy Institution, 2019