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Robert Featured on CFP®: How To Financially Manage Sudden Wealth

The One Investment Trick You Need To Know

Are you anticipating a Sudden Wealth windfall?

Robert was recently featured on the CFP® website with advice on financially managing sudden wealth, whether from an inheritance, business sale, lawsuit settlement, or stock options. See an excerpt from his article below, and read the full article on the CFP® website.

As much as you might like to think sudden wealth that comes overnight is the same as gradual wealth built over decades, I can tell you that after working with hundreds of windfall recipients, it’s not.

If gradual wealth is a smooth escalator ride that can take decades, sudden wealth is a rocket trip straight to the top in seconds. Your financial circumstances change overnight, and you have no chance to adapt or to grow. To make matters more difficult, you’re often forced to make immediate financial, legal and tax decisions that can have permanent and dramatic consequences.

So, how can you turn this one-time windfall of money into something that can provide lasting financial security and improve your life for decades to come?

With a lot happening at once, you need to lean on solid financial principles —building the right team to help guide you, slowing down, learning how to say no to friends and family, protecting your new wealth, setting spending limits and staying on track, among others. But where should you start? I suggest starting with the most important asset you have in this process: your mind.

One of the biggest mistakes I see with sudden wealth is that it is not valued as highly as money that has been earned. Psychologists call this mental accounting, and as a sudden wealth recipient, you need to understand how thislimiting money beliefcan cloud your judgment in making good financial decisions.

The consequences of valuing a windfall differently than earned money can be dramatic. Sudden wealth recipients are inclined to take more riskswith the found money, give it away more freely and spend it faster and more lavishly.

One client who received a large wrongful death settlement check called it “funny money” because he couldn’t get his head around it, even though he lost a family member and spent years battling for justice. Another client received an inheritance and told me the numbers in her bank account felt like “Monopoly money.” If you think of your sudden wealth differently or somehow worth less than the money you’ve earned, the financial consequences can be disastrous — the money that came overnight can disappear just as quickly.

How can you put more value and gravitas on sudden wealth?

Read the full article on the CFP® website.


About the Independent Financial Advisor

Robert Pagliarini, PhD, CFP®, EA has helped clients across the United States manage, grow, and preserve their wealth for the past 25 years. His goal is to provide comprehensive financial, investment, and tax advice in a way that was honest and ethical. In addition, he is a CFP® Board Ambassador, one of only 50 in the country, and a real fiduciary. In his spare time, he writes personal finance books, finance articles for Forbes and develops email and video financial courses to help educate others. With decades of experience as a financial advisor, the media often calls on him for his expertise. Contact Robert today to learn more about his financial planning services.

Reach us at (949) 305-0500