Record-Setting Lotteries Encourage Big Dreams (A Financial Advisor Can Help Prevent Nightmares)
A co-worker of mine joked today that the lottery drawing tonight was over $650 million and this might be her last day in the office. When I asked her what she planned to do with the money if she won, she rattled off about a few hundred thousand dollars’ worth of ideas from paying off mortgage and student loans and to doing some traveling and then planned to invest the rest and do some anonymous philanthropy. She is a very content person who, although fairly financially secure, enjoys the simple pleasures of life like cups of tea and dog walks, so I would hope a prospective lottery win would not change her too much because she is an active community volunteer and very selfless. I think she would do some very impactful community support and would be generous to family and friends and would have a lot of rescue dogs from the pound. She said that she felt the jackpot was a bit too big for one person and she hoped that whoever won it would share it with others because so much good could come from it.
Whenever I see those shows on television about lottery winners, a lot of wasteful spending is shown on material objects. People seem to lose friends and family over jealousy and even become targets of vandalism and other crimes. Is such money the “root of all evil”? I prefer to think that “with great wealth comes great responsibility” to give back and make a difference, but that might not happen for all.
There is a term called Sudden Wealth Syndrome that can affect the suddenly rich. Fear of loss can lead to fear of enjoyment, wastefulness and irrational decision-making can lead to loss of capital in just a few years and even bankruptcy, guilt over having so much when others have so little might provide mental stress, and the separation from friends due to the vast fortune may lead to loneliness. It is important not to make hasty decisions with money, because these decisions made now can wreak havoc on the future. Once again, here is where a financial advisor can help - to help keep the dream from becoming a nightmare.
It is so important to have a plan and understand the purpose of the money. Do you wish to donate to charities or leave a legacy so that family members can enjoy for generations to come? Or do you have other ideas? A financial advisor as part of an overall wealth management team consisting of other professionals such as an attorney and tax accountant can help educate and provide structure. A financial advisor is not able to discuss your finances with others without your permission, so this can be an aid toward keeping things discreet. A financial advisor can help to boost financial literacy and create a plan to invest the money and to enable the money to be distributed according to the tenets of the plan, helping to employ the money to its desired purposes and help to maintain the wealth over time. Yes, a pool of money can even be set aside for travel and leisure - it does not all have to be business.
It’s fun to dream and whoever wins, congratulations.
The opinions expressed are solely those of the author. Seek advice from a qualified professional before taking any action regarding your finances.
Todd A. Slingerland, CFP®
6 Tower Place Albany, NY 12203
(518) 867-4000 x105 [email protected]