In her article, Juliette Fairley discusses what she calls “sudden wealth syndrome,” a problem that is most commonly faced by entertainers, professional sports figures and winners of the lottery. Fairley explains,
“Those that plan, start saving early and understand debt and equity can also experience sudden wealth with the money they accumulate,” Lynch told Private Wealth. Sudden wealth syndrome is a term loosely used to describe the psychological issues underlying the experience of receiving an influx of new or sudden money and the tendency to overspend it.
“They lose it all and we hear these stories in the news,” Lynch said. “It comes down to bad decision making and not having a holistic plan in place.”
For example, one-third of people who received an inheritance had negative savings within two years of the event, according to Federal Reserve and Bureau of Labor Statistics data.
“The worst thing you can do is to ignore the anxiety and the paralysis through analysis associated with sudden wealth syndrome,” said Lynch. “The second thing you don’t want to do is to follow your gut without sound advice.”
Continue reading the full article here: The Downside Of Sudden Wealth
Posted by Allison Trupp, Associate Editor, Wealth Strategies Journal