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Sudden Money ? Are you prepared for it?
?When they hear that you?ve come into money, your friends and family future-spend in a nano-second,? Go yell in your pillow. Keep a low profile.?
Susan Bradley, Author ??Sudden Money ? Managing a Windfall?
Many of us in India are going through unprecedented transition in life involving money. Let us make that as ?Sudden Money?.
Sudden Money could cut both ways. Pleasant as well as unpleasant feelings. A property sale, sale of a large chunk of your company?s stock options at 40, inheritance, etc. bring in mostly pleasant feelings. On the other hand, loss of spouse, divorce, inheritance traced to ill-gotten wealth by ancestors or parents are some of the feelings that largely evoke a strong sense of unpleasant feelings or sometimes shame. Some of us could relate to any of these at some point of time in your life.
Whatever the feelings, like the quote says, you will have many of them swarming over you to grab a share of it. Sounds familiar. Isn?t it??
So, What is this ?Sudden Money?? And how does one manage this
?Transition? that is fraught with so many opportunities yet uncertainties and challenges.
Susan Bradley, a veteran certified financial planner who authored the book ?Sudden Money: Managing a Financial Windfall? and founder of the Sudden Money Institute, defines ?Sudden Money as an amount of money that is much larger than you are accustomed to dealing with? .
To manage the transition she advocates clients first to take things slow. It?s what she calls a ?decision-free zone? ? a sort of financial and emotional timeout to think about what you want, what you need, and where you want to be in the future. A decision free zone is a pro-active time out from making any non-essential decisions. The idea is to isolate the few decisions that are time sensitive and most pressing.
How many times have we not heard of stories about when a spouse dies, the wife [many of them are home makers with negligible or minimal income] does not have a clue or access to how much assets /debt she has been left with by her spouse. By the time she picks up the pieces of her life and manages to find out her net worth/inheritance and what to do with it, she is so emotionally and physically drained out, she has either given up or lost it all.
This situation could be easily avoided by the spouse if he is pro-active and does the following:
1. Creation of Will [while he is alive], plan for distribution of wealth ?whom, what, how much, phases of distribution etc.
2. Executor of the Will or Trustee
3. Store the documents related to financials safely and update regularly.
4. Inform, discuss and educates his wife on the details of net worth and where to find it when he is not around.
5. Inculcate money management skills to his children at a very early age or take the help of professionals to do it. It is very important that children at a very early age learn the value of money and attitudes around it so that they put money to use productively for themselves, society and pass on wealth to many generations.
This takes away the unpleasant aspects of life your family has to deal with in terms of their sudden change in their life and ?status?. Don?t you think this approach will ease the pain for your family and help to be prepared for uncertainties in life? Think about it.
During the decision free zone [which could be anywhere from 6 months to 1 year] focus on what you want to do with the money. It is important at this stage to draw your financial goals in your life, keep re-visiting it till you are clear about what you want to do in life and so on.. You can then implement those final goals by investing wisely. Till such time, the money can lie in safer instruments like a Bank Deposit.
Another aspect of ?Sudden Wealth? is to address the tendency to spend on that big ticket item which one has always been aspiring for. Go ahead and splurge, but do not overspend to regret it later. Lottery Winners and Entertainers are prone to this behavior.
Last but not the least; keep in mind the taxes that you might have to pay for receiving the ?Windfall? money. It helps to shop and consult the professionals in the tax, legal and financial arenas who put your interests first and assist you to help preserve and grow your wealth.
As Susan Bradley says, ?Don?t expect miracles. Money doesn?t solve all your problems, but it can make your life easier. Be careful not to get sucked into the fantasy that now you?re going to live happily ever after. ?It?s just another layer of life,? Ms. Bradley says. ?It doesn?t make you more lovable, beautiful, and smarter. It just gives you more options.?
Partha Iyengar
The author is the Founder and CEO, Accretus Solutions India LLP.
View the original article here
0 Sudden Money ? Are you prepared for it?
?When they hear that you?ve come into money, your friends and family future-spend in a nano-second,? Go yell in your pillow. Keep a low profile.?
Susan Bradley, Author ??Sudden Money ? Managing a Windfall?
Many of us in India are going through unprecedented transition in life involving money. Let us make that as ?Sudden Money?.
Sudden Money could cut both ways. Pleasant as well as unpleasant feelings. A property sale, sale of a large chunk of your company?s stock options at 40, inheritance, etc. bring in mostly pleasant feelings. On the other hand, loss of spouse, divorce, inheritance traced to ill-gotten wealth by ancestors or parents are some of the feelings that largely evoke a strong sense of unpleasant feelings or sometimes shame. Some of us could relate to any of these at some point of time in your life.
Whatever the feelings, like the quote says, you will have many of them swarming over you to grab a share of it. Sounds familiar. Isn?t it??
So, What is this ?Sudden Money?? And how does one manage this
?Transition? that is fraught with so many opportunities yet uncertainties and challenges.
Susan Bradley, a veteran certified financial planner who authored the book ?Sudden Money: Managing a Financial Windfall? and founder of the Sudden Money Institute, defines ?Sudden Money as an amount of money that is much larger than you are accustomed to dealing with? .
To manage the transition she advocates clients first to take things slow. It?s what she calls a ?decision-free zone? ? a sort of financial and emotional timeout to think about what you want, what you need, and where you want to be in the future. A decision free zone is a pro-active time out from making any non-essential decisions. The idea is to isolate the few decisions that are time sensitive and most pressing.
How many times have we not heard of stories about when a spouse dies, the wife [many of them are home makers with negligible or minimal income] does not have a clue or access to how much assets /debt she has been left with by her spouse. By the time she picks up the pieces of her life and manages to find out her net worth/inheritance and what to do with it, she is so emotionally and physically drained out, she has either given up or lost it all.This situation could be easily avoided by the spouse if he is pro-active and does the following:
1. Creation of Will [while he is alive], plan for distribution of wealth ?whom, what, how much, phases of distribution etc.
2. Executor of the Will or Trustee
3. Store the documents related to financials safely and update regularly.
4. Inform, discuss and educates his wife on the details of net worth and where to find it when he is not around.
5. Inculcate money management skills to his children at a very early age or take the help of professionals to do it. It is very important that children at a very early age learn the value of money and attitudes around it so that they put money to use productively for themselves, society and pass on wealth to many generations.
This takes away the unpleasant aspects of life your family has to deal with in terms of their sudden change in their life and ?status?. Don?t you think this approach will ease the pain for your family and help to be prepared for uncertainties in life? Think about it.
During the decision free zone [which could be anywhere from 6 months to 1 year] focus on what you want to do with the money. It is important at this stage to draw your financial goals in your life, keep re-visiting it till you are clear about what you want to do in life and so on.. You can then implement those final goals by investing wisely. Till such time, the money can lie in safer instruments like a Bank Deposit.
Another aspect of ?Sudden Wealth? is to address the tendency to spend on that big ticket item which one has always been aspiring for. Go ahead and splurge, but do not overspend to regret it later. Lottery Winners and Entertainers are prone to this behavior.
Last but not the least; keep in mind the taxes that you might have to pay for receiving the ?Windfall? money. It helps to shop and consult the professionals in the tax, legal and financial arenas who put your interests first and assist you to help preserve and grow your wealth.
As Susan Bradley says, ?Don?t expect miracles. Money doesn?t solve all your problems, but it can make your life easier. Be careful not to get sucked into the fantasy that now you?re going to live happily ever after. ?It?s just another layer of life,? Ms. Bradley says. ?It doesn?t make you more lovable, beautiful, and smarter. It just gives you more options.?
Partha Iyengar
The author is the Founder and CEO, Accretus Solutions India LLP.
View the original article here
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