15 Things To Do If You Get Icon Rich All of a Sudden
So!
You have envisioned, created tactics, strategised, planned and now; executed. Or perhaps you won the lottery. Perhaps a deceased relative left you bank!
Regardless, all of a sudden, you find yourself having come into money.
For me, once I realised I was in a path to great wealth, I found myself wanting to delay that a little bit. Why? I knew that many people who come into money, are not good at keeping it. Statistically speaking, over 70% of lottery winners are back to being broke after three to five years. They have no idea what to do with the money. They’ve ever had money, they’ve never built wealth, and they are eager to spend it all. That’s why having a plan is so important.
It could mean the difference between the money being a blessing or a curse.
I wanted to make sure that once there, I know how to actually keep my blessing.
1) DON’T Let Anyone Know!
This is your number one priority. Immediately after finding out, SHUT YOUR MOUT. This instinct to share the good news with everyone you know, to shout it at the rooftops, to shove it in the faces of your enemies and burn those bridges with your newfound cash; that's what broke people would do. You're no longer broke so privacy is your main concern. You'll tell them when the timeis right.
2) Pay ALL Of Your Debt
This is the first and only expense you should undertake. It's actually because that is what's eating away at your life. As soon as you can, after the money hits your account, proceed to pay off any debt you have accounted for so far, and then stop.
You'll feel like money is no longer an issue and new debts can be repaid immediately. That's not true. Pay off your existing debt and do not create any new debt.
3) Don’t Quit Your Job
Quitting your job immediately after getting money is the first domino in a series of events that will lead you to personal bankruptcy in just a few years time.
We are not wired to be non-productive. No matter how lazy you are, you need something to do. If you're not going to work you'll be out there chipping away at your good fortune.
Although the satisfaction of telling your boss to F off would be enormous for some of you, you'll realize that your feelings towards work have changed. The balance of power has shifted because now you have the power to walk away if it comes to it.
That said if you work unreasonably long hours, you may consider cutting it down so that you can take care of your health.
That said, keep your day job and go about your life in the same way you've done so far.
4) Secure The Money And Let It Sit
Secure the money for a while. Once the money reaches your bank account and you've paid for your immediate debt, let it sit for a little while.
You see, it's not the money, it is you who needs to process this.
Your entire life is affected by this financial change, but you're still the same person with the urge of getting everything you've ever wanted… however… don't.
The best advice is to not touch the money for the first SIX MONTHS. That might sound like a long time, but it makes a massive difference into what impact the money will have on your life. Every day, you'll think about what to do with that money and you'll see that in these six months, plans will dramatically change. That's why you should not be impulsive with youractions.
5) Make Investment In Yourself a Priority
You need to learn before you spend.
If you want to keep the money you need to start learning. You haven't built wealth because you don't know how to grow money. This needs to change. You need to become a person who is financially literate, who understands how money works before you start moving it around. Not doing this will make you reckless or allow people to take advantage of you.
A fool and his money are soon parted.
It's a very popular saying throughout the world because it's true. You don't want to be a fool. You have the luxury of time. Now start investing in yourself. The average person who will inherit or win this much money isn't a sophisticated investor. Do not try to be one. Instead we recommend you start with the basics. If you're in this position right now the best book I can possibly recommend you is “Money: Master The Game” by Tony Robbins. This book will teach you everything you need to know about how a normal person can grow wealth throughout their life even without a big fortune to begin with.
6) Don’t Switch Financial Advisors… Or Get One
Do not switch financial advisors. If you've inherited the money from a rich relative, it's likely they had a financial advisor. The proof of their services is in the amount of money you're inheriting. They know what they're doing and your money is in the right hands. Familiarize yourself with the relationship your relative had and the services they provided.
Good financial advisors usually work through referrals and only accept a limited number of select clients. They're expensive because they know what they're doing. A big mistake newfound wealth individuals make, is that they move it to someone else; or to someone who'll dry them out in no time.
7) Get comfortable… but not
Get comfortable but not “rich, rich” comfortable. Pay off your house but don't move to a rich people neighborhood. This is the most common mistake that for instance, athletes, make. They buy really expensive homes that comes with additional long-term costs like property tax, maintenance and so on. Not only will you spend a bunch of money on it, you've just added a layer of recurring debt to your life. Think about how you spend on liabilities. Do not buy every person in the family a car. Cars are liabilities; your money is wasting away in the driveway. The goal is to fix your life not completely remodel it or switch it up for what you think your life should be like.
8) Don’t invest in your friends
Do not invest in your friends business or lend them money. At some point that cat will come out of the bag and the information will leak. Everyone knows you've got the money, so now money that you didn't earn yourself, or the “too much money” you now have will often times mean some people believe they are somehow entitled to some of it. Everyone will start asking you for money; money you'll never see again if you give it away. They all have new ventures, new projects, new ideas, new problems that your money can fix or light up. However this money is your safety net and putting holes in it no longer makes it safe. That's why the money is also a curse… your relationships are doomed if you give them money. They're going to lose it and your relationship goes down the drain. If you don't give them the money, they'll resent you for it, but at least in the later option, your children can still afford to go to college.
Look very well, before you step.
9) Don’t start or expand a business immediately
Do not start or expand a business immediately. We've all had the dream of being the boss, telling people what to do and looking at other businesses, like,
“I could easily do that myself”
The truth is 9 out of 10 businesses fail. See it like, you've already exercised your luck getting the money in the first place. Luck is not what's going to make your venture successful. Start small, talk to your financial adviser and run all of your investment decisions by them. It's easy to get caught up in the illusion of potential success when you're starting out the same way this illusion will fade away, and so will the funds you sink into it
10) Prepare for change
The more money you have, the bigger the target on your back because now people have things to take away from you. You are more likely to be sued, people will try to scam you or use emotional leverage to get money out of you. Having money is a lot of work. You'd think life gets easier with money, but the truth is while some problems get solved, other more complex problems rise up in their place.
11) Focus on getting healthier
Getting healthier. You've got money now. It's time to enjoy it for as long as possible. You cannot afford to be a victim of your own bad choices at this point. Begin with a full medical check-up and then start taking better care of yourself. Pay more attention to what you consume. Find ways to improve your health.
12) The 5% rule
The greatest thing to wrap your head around is the money you just received will not last forever, that is unless you're familiar with the 5% rule.
To put it simply, the money you have needs to be wisely invested so it generates an annual return. If you only spend that return, in theory your money should last forever. You need to get as close to this as possible. Think of this large sum of money as a money tree. As long as you take care of it it will bear fruit every year. You can enjoy these fruits.
Don't go cutting the tree down as temporary firewood.
You need to understand money. The 5% rule comes as a result of average investment returns. If you're smart about it and have your money in an index fund like the SNP or similar once you adjust for inflation, you should be left with a bit more than 5% returns per year. Assuming you've got your hands on five million dollars, using the 5% rule, that's a cool two hundred and fifty thousand dollars per year every year. Diversify that portfolio well and you're set. The problem is once people see the millions, they don't refrain themselves from spending.
13) Protect Your Kids
Protect your kids from the money. Not only will your life be turned upside down because of the money, your kids lives will change as well. This can be done with trusts where they get an allowance from the money without allowing the original investment to be touched. That's how the rich are getting richer and how legacy wealth is created.
14) Don’t Cheat On Your Partner
Do not cheat on your partner. This should go without saying. However, once you've got money people will want to be around you for their own personal motives. Temptations will be big and mistakes will be expensive.
How expensive?
Half of everything and child support expensive.
This money should strengthen the bond between the members of the family, not drive them away. Unfortunately not everyone is mature enough to look at the effects their actions will have on their lives and fall into easy traps.
15) Play It Safe
Play it safe. Why risk it? If you find yourself in this incredibly fortunate position that you can provide a lasting benefit to you and your entire family, Its ok to play it safe. Do not put your money into shady businesses. Do not try to push your luck and hope to double your investment quickly. Say thank you and play it safe. Really. The best thing to do is to behave like this event never happened and somehow your debt and financial problems went away. Now live your life in accordance to this rule and you'll be well off the money will grow. You'll be taken care of if you just don't abuse it.
RECAP!
DON’T Let Anyone Know!
Pay ALL Of Your Debt
Don’t Quit Your Job
Secure The Money And Let It Sit
Make Investment In Yourself a Priority
Don’t Switch Financial Advisors… Or Get One
Get comfortable… but not
Don’t invest in your friends
Don’t start or expand a business immediately
Prepare for change
Focus on getting healthier
The 5% rule
Protect Your Kids
Don’t Cheat On Your Partner
Play It Safe
Abiosè
(Dr Abiose M O Haara)
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