If you received a large windfall suddenly or unexpectedly, you’d likely expect to feel happy and excited for the opportunities it presents. Whether you’re a successful entrepreneur, perhaps selling your business or inheriting, sudden wealth can feel overwhelming.
Far from being a happy event for some, coming into a large sum of money can prove a massive emotional shock. In fact, it can even result in a recognised psychological condition called ‘Sudden Wealth Syndrome’. The symptoms of this syndrome will vary from person to person, but can include feeling isolated from friends and family, guilty about the good fortune, uncertain about the future, or afraid of losing new-found financial stability.
The process of adapting to one’s new financial status can lead to poor mental health and thus self-destructive behaviour, for example excessive spending or risky investments.
The link between mental health and money issues
It is well known that our mental state has a significant impact on how we handle our money. In fact, nearly half (46%) of all people with problem debt also have a mental health issue*. Unfortunately, stories about people who won millions of pounds in the lottery before losing it all, or even getting into debt, are all too common.
Avoiding the negative impacts of sudden wealth
While we can’t always plan for it, or even avoid some of the negative feelings associated with coming into money, there are things we can do to keep our finances safe.
• Don’t make any hasty decisions
- put your windfall into an easy-access savings account(s) (within Financial Services Compensation Scheme limits), where it can accrue interest, until you have decided what to do with it
• Keep it on the down low
- Sudden Wealth Syndrome can cause paranoia and anxiety that people only like you because you have money. Keeping things discreet will help alleviate these feelings and help with clear decision-making
• Take professional advice
- spending or investing large sums of money without advice can be disastrous for your finances. Investment and tax planning advice are crucial. We’re on hand to help you make wise decisions that will ensure your new-found wealth works hard for you and your family.
*Money and Mental Health Policy Institution, 2019
It is important to take professional advice before making any decision relating to your
personal finances. The value of investments can go down as well as up and you may not get back the full amount you invested. The past is not a guide to future performance and past performance may not necessarily be repeated.