How People Handle Sudden Wealth: Insights from Psychology and Real-Life Stories
Hello Quora family,
After a long time, I am here to answer this question. I am not a rich person, but recently I bought a new phone—a OnePlus 9 Pro which costs 70K. Here is a picture of my 'toy,' my all-time favorite PINE GREEN OnePlus phone. If you like it, please like the post too. Very rich people, if they are intelligent, can certainly handle such wealth. Most often, however, they don’t.
Psychological Studies on Sudden Wealth
A psychological study was conducted on lottery winners and investors in Silicon Valley, California, where there are more millionaires per capita than anywhere else in North America. The study aimed to measure the effects of being suddenly rich. The results were very surprising, leading to the identification of a new mental condition: Sudden Wealth Syndrome. People who suddenly become wealthy go through three distinct stages.
Stage 1: Bliss and Fulfillment
In this initial stage, you buy everything you ever wanted. From cars, houses, to expensive habits, wealth is now at your disposal. Your lifestyle changes to reflect your new social standing. This period is marked by happiness and contentment. But then, one day, you wake up and do an inventory. You had a lot of money, now you have some money, and a lot of expensive stuff. Suddenly, you wonder about the future, given that your newfound windfall is not a regular thing. You have reached the crest of feeling happy about the money.
Stage 2: Self-Doubt and Social Withdrawal
The second stage brings with it self-doubt and social withdrawal. You realize that the lifestyle change has caused you to leave behind regular friends and now see new people as mere money-grubbers. You become despondent, depressed, and suffer an identity crisis. It is a sad fact, but most people who come into a lot of cash have to deal with media problems, family issues, and law suits.
Real-Life Examples
Consider a couple in Canada who won the Lotto 649. They won only 90K, but within a day, they had strangers calling them with sob stories about their dire financial and medical situations, claiming it was their responsibility to help. They eventually lost their new home and were worse off than they were before. This story illustrates the common issues faced by lottery winners.
In Saskatchewan, a man won not one but two multi-million-dollar jackpots within five years. He spent the money within twelve months and ended up living on welfare. This story serves as a cautionary tale, making you think twice before buying a lottery ticket.
Advice for the Few who Win
For those who manage to win the millions, it is crucial to be prepared. According to a piece of advice given to a 23-year-old Alberta man who won the second-largest jackpot in the province, the best course of action is as follows:
Go Away: Once the news of your win is announced, every person who ever heard your name or stood in a room with you will be knocking on your door with their hands out. Put the cheque in the bank and go for an extended trip to a place you’ve always wanted to visit. Seek Professional Help: Get a lawyer and a financial planner. A lawyer will help protect your interests, and a financial planner will ensure that the money lasts, as many people often spend it all within a year.It is not just about handling the windfall but also about safeguarding your future. Winning the lottery or becoming suddenly wealthy is not a cure-all; it requires careful planning and management.
Conclusion
Whether you are rich or not, the handling of sudden wealth involves periods of joy, self-doubt, and the need for careful planning. For those who do win, it is crucial to be aware of the challenges and take the necessary steps to secure your future.