Your Money: Blessing Or Curse?
Sam Bradford and Chris Shaw. Both are grinning ear to ear today (minus a couple of teeth on one of them). Two guys from vastly different backgrounds who probably share the same thought: “I can’t believe all that money is mine.”
Bradford, the former University of Oklahoma quarterback and Heisman winner, was Thursday’s #1 player chosen in the NFL draft. Shaw, a Missouri gas station clerk with unpaid bills and missing two front teeth, was the winner of Wednesday’s Powerball Lottery jackpot. Sam’s payday? Some estimate an average of $13 million a season with $50 million guaranteed. Chris’s money train will carry $258 million. (Both minus taxes of course.)
No more financial worries for these two forever, right? Hopefully. But there’s no guarantee. The biggest problem with sudden wealth, whoever you are – star athlete or convenience clerk – is the majority of people have no money sense. Mansions, fast cars, jewelry… it can disappear faster than a $10 bill in my wallet with my kids around.
Chances are you won’t hit the jackpot like Bradford and Shaw have. But you may come into an unexpected windfall someday. How you handle the new chunk of change, could very well determine how long you keep a hold of it. Financial advisor Stan Rickner, founder and president of Seasons Financial Group, says there are “numerous examples… of people who went from pauper-to-prince-to-pauper or worse than they were before the won.” He told me there’s a right way to manage the newfound wealth. But first, Rickner warns of the pitfalls if you don’t.
The wrong way to manage your financial windfall:
- Spending like there is no limit. For example, over-extending yourself, buying a large house, cars, “toys”, etc.
- Not anticipating the future. Will the money run out? What about healthcare, retirement, estate planning, etc.?
- Failing to spot the “money pits”. Business start-ups fail or cost more than anticipated.
- Becoming a “bank”. Rickner says making loans to friends and family is always a bad idea.
Now, the right way to manage your financial windfall:
- Consult with professionals. That includes tax, investment, legal & psychologist.
- Start a savings plan. Earmark funds to be set aside for future needs.
- Develop an investment plan. And make sure it’s diversified.
- Take responsibility and be accountable. That means educate yourself and don’t become a victim of other’s bad decisions.
Rickner says money, especially a lot of it, can be either a blessing or curse. It’ll be interesting to see what it becomes for a gas station clerk and professional quarterback. We’ll be watching from the sidelines.