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Money Madness Warning: A Financial Windfall Is Harder To Manage Than You Think

Susan Bradley, Sudden Money, Financial Windfalls

With Susan Bradley, Founder of the Sudden Money Institute and Author of Sudden Money: Managing a Financial Windfall

With the recent lottery excitement, Steve wanted to get a sense of what it’s like to be on the receiving end of a financial windfall.  So he turned to Susan Bradley, Founder of the Sudden Money Institute and the author of Sudden Money: Managing a Financial Windfall.

With a winner announced on the $1.6 billion lottery, Steve wonders what goes through a person’s mind when they wake up one morning, insanely richer.

Susan says it takes a long time to adapt to sudden wealth.  While most billionaires spend a lifetime building wealth, lottery winners get it all overnight.

How to Handle Sudden Riches

Susan’s advice, in such cases, is to be careful about who you talk to.  With the lottery, winners shouldn’t claim the ticket right away.  Instead, keep quiet about it and talk to a financial advisor who’s handled financial windfalls before.

Five To-Dos After You Win Big

Susan recommends sharing the news with just one person that you are close to.  Keep it confidential, even though it’s really hard to do.

But before you do that, sign the back of your ticket.  That’s because it’s a bearer ticket that can be cashed by whoever has it.  Signing it helps you claim it’s yours, should you ever lose it.

Next, get a new telephone number.  Bizarre as that sounds, beneficiaries of a financial windfall are hounded by telephone calls from all and sundry.

Then hire a financial advisor who knows how to handle these kinds of transitions.

And, finally, get a grip on your excitement, get some sleep, and settle back into your routine.

Four Stages of the Transition

Through experience, Susan has identified four stages of the transition people go through with sudden money.

Stage 1: Anticipation

Stage #1 is anticipation.  Most financial windfalls are not from the lottery but from something more predictable, such as a large inheritance, the sale of a business, etc.

Rein in your expectations because the reality is never what you expect it to be.

Stage 2: Ending

Stage #2 is ending.  This is when the event occurs and your life is forever changed.  This is a time of adjustment.  Don’t rush into your new world order.  Instead, think it through and be careful with the decisions you make.

Steve likens this to the anticipation of the birth of your first child, your expectations of what it would be like, and the disorientation and adjustment that follows the actual birth.

Susan adds that this chaos can be managed better than you think, if only you keep your wits about you.

Stage 3: Passage

Stage #3 is passage.  It’s about adapting to the change and is the longest of the four stages. Passage usually takes years, not months, to transition into your new life.

Susan recommends hiring a professional to work through psychological and emotional issues, to get perspective and get centered again.

This is a time of ups and downs. It’s not a clear-cut trajectory.  In transition, people cannot see the light at the end of the tunnel just when they enter it.  But over a few years, you can put things in order and get yourself all sorted out.

With a financial windfall, there’s a sudden change in affordability.  New money opens up new opportunities.  You’ve got to wade through them until you come up with something that is meaningful to you.

Stage 4: The New Normal

Finally, stage #4 is the new normal.  A new normal is when life feels predictable again.

As a financial transitionist, Susan looks back to see what went well, what could have been better, and what people wish they had known earlier.  She uses this to create a personal transition toolset and a starting point for future life changes.

Disclosure: The opinions expressed are those of the interviewee and not necessarily United Capital.  Interviewee is not a representative of United Capital. Investing involves risk and investors should carefully consider their own investment objectives and never rely on any single chart, graph or marketing piece to make decisions.  Content provided is intended for informational purposes only, is not a recommendation to buy or sell any securities, and should not be considered tax, legal, investment advice. Please contact your tax, legal, financial professional with questions about your specific needs and circumstances.  The information contained herein was obtained from sources believed to be reliable, however their accuracy and completeness cannot be guaranteed. All data are driven from publicly available information and has not been independently verified by United Capital.

Read The Entire Transcript Here

Steve Pomeranz: With the recent lottery excitement, I thought it would be a good idea to live vicariously for a moment. And imagine what you would and should do if those six numbers ever came up in your life. One person we always default to get some answers in this unique area is Susan Bradley.

Susan Bradley is the founder of Sudden Money Institute and a recognized thought leader in what is referred to as financial transitions planning. Hey, Susan, welcome back to the show.

Susan Bradley: Thanks, Steve, good to be here.

Steve Pomeranz: So the latest lottery hit about 1.6 billion and with a number that large, one’s mind starts to imagine life as a billionaire. So before we get too carried away with this, if that were to happen, what exactly would a person do if they woke up one morning insanely richer?

Susan Bradley: [LAUGH] It takes a long time to really adapt to this kind of an experience.

Most billionaires spent their lifetime building that wealth and now you have it overnight. So there’s a really strong experience of stress. It’s the kind of stress I call you stress, it’s not distress. But it means that the mind and body work in the same way as if you were stressed with high anxiety and something terrible, so that’s a surprise.

The ability to articulate, the ability to breathe, people say; sleep deprivation is very, very common in situations like this. If we went by what you should do, become, that’s not likely to happen for a couple weeks. You should be careful about who you talk to, so you form your inner circle, that’s really tough to do.

You shouldn’t claim the ticket right away. You should think it through, get some professional help, know where the money would initially go, that kind of thing. What happens is we tend to rush into these situations and spin around and spin other people in our life around, [LAUGH]. And who’s to say, everybody thinks they know what they would do, but you don’t really know until you’re there.

Steve Pomeranz: Exactly, well from a previous discussion, there were five things. You mentioned one of them that a person should first do. The first one was share the news with just one person. Is that good advice still?

Susan Bradley: Yeah, it’s good advice. It’s very, very hard to do.

Steve Pomeranz: Yeah.

Susan Bradley: Very hard to do.

Steve Pomeranz: Forget that, throw that out the window. All right, the next one is [LAUGH] .

Susan Bradley:  [LAUGH]

Steve Pomeranz: Alright, the next one. Get a new cell phone and telephone number.

Susan Bradley: Yeah, that you can do.

Steve Pomeranz: That sounds reasonable, that sounds smart.

Susan Bradley: But even that, you know people who tell me that they followed that, they said I felt like a bumbling idiot.

I was trying to explain that I needed this and they said they just kept talking in circles. So even like being able to explain I want a new cell phone with a new number. It’s hard when you’re in the state of high stress.

Steve Pomeranz: Yeah, and I guess your friends go why’d you do that, and you go [LAUGH] just felt like it, it was on a whim, you know you can’t say anything.

Sign the back of your winning ticket. Now I mean that sounds kind of like, I don’t know I think about having a signed check, it’s almost like a bearer instrument. Meaning that, I guess in a sense, whoever has it in their hand owns it, so I would be terrified of losing it.

Does signing the back of your winning ticket prevent that?

Susan Bradley: No, you’re so terrified because-

Steve Pomeranz:  [LAUGH]

Susan Bradley: Because if you lose everything, it doesn’t matter, losing it is not.

Steve Pomeranz: Yeah, that’s true.

Susan Bradley: But if you lost it and someone picked it up and it’s blank and it happens to be the winning number, guess what happened?

Steve Pomeranz: So, yeah, you need to sign it.

Okay, number four, hire a CPA, an attorney, someone who knows how to handle kind of transitions, a financial adviser who kind of works in this area. I think that’s a, obviously self-explanatory. And then number five is sleep.

You already mentioned that once, I’m mentioning it again. Sleep deprivation is common in times of extreme excitement or stress. And so I guess some of that has got to do with getting a hold of yourself. Get a hold of yourself, that’s number one right. [LAUGH]

Susan Bradley: [LAUGH] Yeah, good luck with that.

Steve Pomeranz: Yeah, okay. All right you’ve also identified, I mean you work in this area a lot. And you’ve identified four stages of the transition. We talk about the seven stages of grief and so on. And so I like the way you had put this together. Four stages of transition.

Let me go through each one of them and get your opinion on them. Number one is anticipation. So we’re not necessarily talking about lottery winnings. We may be talking about a big inheritance or something of that nature.

Susan Bradley: Retirement.

Steve Pomeranz: Retirement.

Susan Bradley: Retirement could be.

Steve Pomeranz: Sale of a business.

Maybe at numbers that you had never imagined or something like that. So dealing with anticipation, tell us about that stage.

Susan Bradley: Well, in events that are planned for or that are intended. It’s when you know that you’re going to retire, or you know that there is an inheritance coming your way, or you’re going to tell the business.

You don’t know exactly when, you don’t know how much, but it’s already influencing your behavior, and your spending or your commitment to other people. So it’s a good time to recognize it. So you can start to put some order into your thinking to anticipate the event. It’s never exactly the way you expect it to be.

But if you have some advance technique for it—how do you manage your expectations? What do you say and don’t say? How do you find limits of what’s coming your way? It helps you be less stressed when the event happens in the ending stage.

Steve Pomeranz: So let’s go to the next stage, which is ending, it’s the actual change that occurs.

And it occurs during this stage called ending, explain that a little further.

Susan Bradley: Well, that’s when life as it was is over. You’re now a married person, not single. You’re now a widow or widower, not married or you’re unemployed versus owning a big business and so status identity has shifted.

Usually, your finances are in motion like your life is in motion. There’s big pieces in your life need to be put back together because they’re fundamentally different, so it’s a busy time. But it’s also a very human time, where again, people can have a sense of a fog or overwhelm or fatigue or maybe a lot of excitement.

So it’s a time to be careful about your decision-making. Don’t rush into this and try and put everything in order. Give yourself some time and work with people who are generous with that and understand the need. It takes about a year or two to put everything back together, it depends upon how complex it is.

Steve Pomeranz: When you are mentioning this it, I got an image of this being something like anticipation, anticipating the birth of your first child.

Susan Bradley: Yeah.

Steve Pomeranz: It’s not necessarily money related, right? But you kind of describe it similarly.

Susan Bradley: Absolutely.

Steve Pomeranz: In that there is the anticipation and then the actual event happens and there is a lot of disorientation and adjusting, I guess is the big word.

Susan Bradley: Yes, from chaos that’s there, but you can create, just like with the birth of a child, you can create order within chaos. And if you don’t see chaos as being so terrible and you’re defective because it’s there, just see it and you can deal with it much better than you think.

Steve Pomeranz: Right, the third one is passage, it’s the time of adapting to the change and it’s the longest of the four stages. Tell us about that.

Susan Bradley: Usually it takes years, not months. Sometimes it’s four or five years, and it’s when we’ve gone through a big event, we put our lives back together, the big pieces.

But there’s still this uncertainty, really, like who do we want to be now? We get to reboot; we get to rethink. And if you have a team with you, a professional who understands that, rather than locking in the way you want to be in your life, give yourself some room to explore, to imagine.

And it’s a time of ups and downs. It’s not a clear-cut trajectory in either way. Like a widow, the second year of widowhood, they’re usually in passage. And it’s a very hard time for them because it feels like these emotions will never end, but they do. And then they come into this awakening kind of thing and put things back to order.

It just takes time.

Steve Pomeranz: It could be.

Susan Bradley: But to appreciate that.

Steve Pomeranz: Yeah, it could be an exciting time. I mean there’s all these new opportunities.

Susan Bradley: Absolutely.

Steve Pomeranz: Getting back to having a windfall. Let’s say you lived a certain way because you were under financial constraints.

And all of a sudden you’re really not. And so, now there’s new opportunities. All kinds of new ideas. And you’ve got to kind of wade through them until you come up to something or a few things that are meaningful to you. And finally, and we don’t have much time, is the new normal, what is that?

Susan Bradley: A new normal is when life feels predictable again, status quo. And what we do as financial transitionists there, is we look back to see what went well, what could have been better, what does someone wish they had known. So we create a personal transition toolset, so it’s a starting place to next time life changes.

As a financial transitionist, you need to be prepared for your clients to go through many different life events, and sometimes they overlap. So they have a process that works for that one client, and you can go back to that as a starting place, really helps.

Steve Pomeranz: Yeah, and there’s a sense of mission accomplished, but really it’s still developing.

There’s no end point to this. Your life is still developing, so you have to be careful not to just stop cold and say, okay, this is it. I’m done, right?

Susan Bradley: Yeah, it’s really helpful next time life pivots you in a new direction, you’ve got someone who says, now last time these things didn’t work, this did.

Steve Pomeranz: Yeah.

Susan Bradley: This is our starting place. We know we can do this, let’s start here and go through the process because, overall, it can take you five or six years to go from what was, to what will be.

Steve Pomeranz: Right, my guest, Susan Bradley, the founder of Sudden Money Institute.

And she’s referred to as a Financial Transitions Planner. And Susan, hey, thank you so much for taking the time to share with us today.

Susan Bradley: My pleasure, thank you, Steve.

Steve Pomeranz: To hear about this and any interview that we do. Don’t forget to go to our website, which is stevepomeranz.com.

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