Sudden wealth changes your circumstances, and it can be difficult to manage that influx of money effectively. Here’s your guide to sudden wealth management.


Does sudden wealth change a person? The short answer is no.

If you struggled to manage your finances before obtaining sudden wealth, you won’t magically be able to manage money once you have a surplus. That’s not to say you can’t learn how to manage your wealth effectively, but the same attributes and flaws that characterized you before you became wealthy will remain.

What sudden wealth does change is your circumstances. It augments your ability and willingness to take risks — and your ability to prepare for the future. It can present you with exciting opportunities, but you must have specific expertise and knowledge to take advantage of them.

The Realities of Sudden Wealth Management

Unfortunately, most people who experience an overnight change in wealth are unable to handle the emotional stress, altered personal relationship dynamics, and financial complexity that accompany their new circumstances. Sudden wealth can sometimes be a complete surprise (as in the case of lottery winners), which leaves people unable to plan. Even expected changes, such as an inheritance of wealth, include many variables and can be influenced by external factors. As a result, both types of recipients may have difficulties holding onto their money for long.

Often, the newly wealthy receive an outpouring of financial advice from friends and relatives. This typically unsolicited advice can be overwhelming and create confusion and paranoia that leads to poor decisions that only exacerbate negative feelings. Especially in the case of an inheritance, which typically occurs in the immediate aftermath of a loved one’s death, sudden wealth can yield feelings of unworthiness and insecurity that further cloud your judgment and prevent you from acting prudently.

But it doesn’t have to be this way. With a proper plan in place to guide your decision-making, you can overcome negative emotions and make the most of the opportunities ahead.

Why Have a Plan?

We’ve likely all heard the old maxim that “failing to plan is planning to fail.” This is perhaps never more fitting than when it relates to sudden wealth management. Without a plan to guide your spending and investing, you’ll likely succumb to the forces seeking to separate you from your money — whether they’re internal or external actors. On the other hand, a thoughtful financial plan can help you create good spending and investing habits that should help your wealth last.

Your plan should include both short- and long-term goals. It should provide a complete overview of your financial flow, highlight your current and projected income streams, and assess your current and projected expenses. Your plan should also model a range of possible future scenarios that might affect your finances (e.g., adverse health events or early deaths) so that you can be prepared for both best- and worst-case outcomes. You also need to think realistically about how your lifestyle might change with the influx of wealth, ensuring you can continue to live comfortably within your increased means.

High net worth individuals must also consider tax implications, which can be the most significant barrier to maintaining and growing your wealth. If you don’t have a thorough understanding of the tax ecosystem, it’s a good idea to talk to a specialized financial advisor. Seek referrals from friends, family members, or other people who have successfully navigated situations similar to yours. They might be able to point you to a trustworthy advisor who can help you develop your plan so that it is both easy to understand and highly actionable.

In addition to offering expert tactical spending, investing, and tax guidance, your financial advisor will serve as an objective and less emotional counterweight to the internal feelings and external actors that trigger compulsive thinking and behavior. For the suddenly wealthy, having access to this kind of measured counsel is often critically important.

Depending on how you handle it, sudden wealth can be a boon or a burden. Your wealth will inevitably affect your relationships, your responsibilities, your desires, and, ultimately, your happiness. The role of a financial advisor is to ensure those changes are positive ones. With the right advisor, your sudden wealth won’t just deepen your pockets — it will enrich your life.

Want to know how we’ve helped individuals and families manage sudden wealth? Contact us to learn more or to set up a consultation.


This article is prepared by Pekin Hardy Strauss, Inc. (“Pekin Hardy,” dba Pekin Hardy Strauss Wealth Management) for informational purposes only and is not intended as an offer or solicitation for business. The information and data in this article do not constitute legal, tax, accounting, investment, or other professional advice. The views expressed are those of the author(s) as of the date of publication of this report, and they are subject to change at any time due to changes in market or economic conditions. Pekin Hardy cannot assure that the strategies discussed herein will outperform any other investment strategy in the future; there are no assurances that any predicted results will actually occur.