Could you survive
a $1 million windfall?
you are the Survivor and just won the million bucks surviving
the wicked, wild, bug-infested location of whatever spot is home
on the latest "Survivor" episode.
Would you know how to stretch the dough? Could
you survive stardom?
And what would you do with all that money?
First things first
Experts exist for just such mind-boggling
events. They say that financial success is not unlike "Survivor"
itself: It comes down to which alliances you form. Some you avoid,
such as long-lost friends with their hands out. Other alliances,
you make: with the right financial experts.
Here's what the experts recommend you should do once
you know the cash is yours:
- Don't do anything rash. Don't make any promises.
- Get out of the house. Better yet, get out of town.
The media coverage will be intense. Check into a hotel or stay
for a while at the home of a friend or relative.
- Get an unlisted phone number. If you already have
an unlisted number, change it.
- Talk to an accountant or tax attorney (or both)
to figure out what your tax options are and to know how much money
you will end up with after taxes.
- Make sure your tax adviser finds out what your
payment options are, and discuss those options in depth before
you pick one.
- After you choose your payment option and you know
how much you'll get after taxes, hire a financial adviser to craft
an overall investment and financial plan.
- Find that well-trained financial adviser through
accredited agencies such as the Certified
Financial Planner Board or the National
Association of Personal Financial Advisers.
Experts are emphatic about the order in which you
do these: first the tax expert, then the financial adviser.
A tax expert "can tell you how much you're keeping,"
says Philip M. Susswein, a trust and estate lawyer in New York City.
"That's why I say talk to this person first instead of an investment
analyst because the investment analyst needs to know how much you're
No immunity here
Even when they get good advice, people who get windfalls
"The No. 1 mistake is that people think short-term,"
says Marcia McMillan, a certified financial planner with American
Financial Advisers in Brookfield, Wis. "Ask yourself when will
I really need the money: now, in retirement or sometime in between
-- for example, when the kids go to college."
Another common mistake is carelessness.
"Because it's 'found money,' for some reason
they care less about paying a penalty for doing it the wrong way,"
McMillan says, explaining that a recipient of a windfall might lose
30 percent of an investment and not really mind.
Imprudence is more a mistake of youth, says John Fahy,
an accountant and lawyer in New Jersey. Adults over 40 tend to invest
windfalls carefully, but "younger people often want to live
large and they buy boats and big houses. When the bills come in,
it becomes difficult to pay the piper."
Perhaps the hardest thing to do is to practice moderation
when immoderate amounts of money come into your life. Of course
you shouldn't blow all the money quickly, but neither should you
feel guilty for having a little fun. So, go ahead, blow some of
Beware the sudden-wealth syndrome
Most of us can't imagine anything but bliss when we come
into a cool million. But, believe it or not, money does not buy
"I call it the myth of the American dream --
the assumption that money can, should and does buy happiness,"
says Jessie O'Neill, a psychotherapist in Milwaukee who specializes
in fiscal affairs and founder of The
Just the opposite can happen. Coming into a lot of
money can lead to feelings of guilt, fear and isolation. It's called
"sudden wealth syndrome."
"People develop a kind of survivor's guilt,"
O'Neill says. "They start to wonder if they deserve what they
got. There's this feeling of almost being a fraud. 'Why me? I don't
deserve it.' It's basically a discomfort, a guilt with the money."
You're grappling with your own feelings about the
money and what you're going to do with it, you also have to deal
with other people's attitudes toward money and their attitudes toward
you now that you have it.
Will your friends be insulted if you offer to pay
for dinner? Or will they think you're a cheapskate if you don't?
It can be awkward for everyone involved. Some new-money people end
up pulling away from family and friends to avoid these kinds of
So, what can you do to find happiness should you be
struck down with this sudden wealth syndrome?
"Find out what makes your heart sing. What motivates
you? What are you called to do?" O'Neill says. "That's
not an overnight thing."
"When a person comes into money, it amplifies
their basic personality, their basic self," says Myra Salzer,
president of The
Wealth Conservancy, who gives financial advice to people with
"If they tend to be curious, they can travel
the world. If they're intellectual, they can go to school for the
rest of their lives. If they're hypochondriacs they can be fabulous
"If they know how to enjoy life, they can certainly
do that with intensity."
-- Posted: May 20, 2002