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Wealth & Well-Being

Protecting Your Financial Windfall

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The last word that comes to mind when you think about receiving a large sum of money is "shock". Indeed, the very notion of being the recipient of a financial windfall brings about feelings of extreme relief and jubilation, but the term "shock" to many, sounds a bit extreme. The reality, however, is that people can and do experience Money ShockTM that can negatively impact their decision-making while in financial transition. Stress, grief, panic, fear, and distrust are just some of the negative emotions that can come with new wealth. Those, coupled with feelings of excitement, relief, and joy, plus the potential for underlying family dynamics can lead to a mix of emotions that can lead to sleeplessness, confusion, clouded judgment and lack of thought clarity among other things. But there is a light at the end of the tunnel.

According to the Sudden Money Institute®, There are three stages of Money ShockTM Management:

  1. Financial Triage: this is a space where you can deliberate without judgment, lower your stress levels and restore your body and mind to a more peaceful state.
  2. Change Management: This is a time to begin creating a plan for yourself, identify opportunities and set goals for yourself and your money.
  3. Well Being: This is being able to accept your new reality and feel comfortable in the goals that you've set, the path you are on and the life you are living from a holistic perspective.


Effectively managing a large financial windfall can be a time of much stress and uncertainty with many potential roadblocks standing in the way of true happiness through your newly found economic freedom.

Windfall recipients must be mindful of the many financial and emotional hazards that accompany this often-mixed blessing. It can be easy to fall into situations and spending habits that can jeopardize this financial opportunity. It is only with great care and much vigilance that your sudden money can be tended and cared for properly to avoid being unnecessarily squandered or taken advantage of.


Despite the many feelings that are universal among windfall recipients, the way these emotions are processed and the subsequent behaviors that result vary. Some suffer from a sort of spending paralysis and are too tight in its grips to spend money on just about anything. Others may find themselves chomping at the bit to run out and purchase a new car or the latest 120-inch screen television. Those who have received their windfall from the sale of a business might be more inclined to spend. After working and tending to their business for many years, those who finally have their long-awaited financial prize may want to instantly reap the rewards of all those years of demanding work and perseverance.

Also among those who can be susceptible to making poor choices with their new wealth are lottery winners. In part, because it is money that wasn't earned through their own work, it can slip through their fingers and into the hands of friends and family members asking for assistance. Long lost relatives and friends can appear from out of the woodwork looking for help, and lottery winners often have difficulty setting appropriate boundaries to protect their windfall. Many lottery winner's express feelings of guilt for not giving money to those relatives and friends perhaps because they feel like they didn't earn the money themselves. The reality is that lottery earnings can benefit loved ones most when it is managed prudently for the long term.

One of the most emotionally challenging manifestations of sudden money is losing a spouse or close loved one and inheriting their estate. This transition coupled with coming into a large sum of money can have a deep impact on one's physical and emotional health. Feelings of grief and regret can often be tied to the wealth that has been inherited that can make it a challenge to even want to address what choices to make regarding investments, spending, savings, etc.


One of the first things we advise our clients to do before developing a long-term plan is: don't change anything. Walking through a clearly defined process before making any big decisions can bring you peace at a time when there are many questions unanswered. If instead of making quick decisions, you are able to identify possibilities and limitations and set goals based on exploring the conclusions you come to, it will likely be of great benefit to you and your loved ones for the long term.

So, what should you do with your newly found financial freedom? Simply holding off on making any significant financial decisions can be helpful in absorbing and processing your emotions around the circumstances and significance of your windfall. Many people experience what we call "Financial Panic." If you are getting a barrage of information and advice and new terms you've never had to become comfortable with before, your body goes into overdrive to manage the stress. This state of stress over the long term diminishes your physical and mental health and can lead to lapses in judgment and clouded thinking. Replacing financial panic with increased control and confidence can help you regain your clear-headed mindset.

The first thing that windfall recipients need is a "Decision Free Zone" to help normalize their new reality. This is a place or period of time that allows you to consider your goals and options without feeling like you need to make a decision for some time. Establishing this type of healthy relationship with your wealth from the start can be the difference between feeling confident about your choices or the potential for having some regret.

Relying on the help and expertise of a skilled and experienced financial advisor can be invaluable in helping windfall recipients decide how to spend or invest their sudden money. As Certified Financial Transitionists we are experts in helping those experience significant financial transitions like receiving a windfall. We explore the emotional and practical aspects of your unique circumstances and advise our clients with a life planning approach to wealth & well-being. Taking a measured and careful approach to your new windfall can help assure that you and future generations can truly benefit from this opportunity.

Written by Robin Young, CFP®

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