What To Do If You Suddenly Come Into A Large Sum of Money?

Key Takeaway: Whether a business sale, inheritance, or lottery win, coming into money changes your life in fundamental ways. Being purposeful in how you spend it, invest it, and use it for good will impact whether you ever experience true joy from having life-changing money.

My son reads Reddit for his news, and over the past year, I have also started to tune in to it. I have stumbled across a subreddit for personal finance that has a lot of good questions, and the title of this post was one of them. The poster is in their late 20s and inherited more than $10 million. Usually, someone comes into this kind of money from a business sale or even stock option exercises 20 years later than this poster. Regardless of how someone comes into this amount of money, I have three ideas to consider.


1. Do not change spending too fast – be purposeful and understand what will bring you joy.

A lot of money can be life changing. But my suggestion is not to change too fast. In fact, consider not changing anything for six to 12 months. Lifestyle creep is fairly common; as people increase their income, they slowly increase their lifestyle. But if you come into sudden money, lifestyle creep can turn into a lifestyle tsunami. A bigger house, nicer car, giant boat, or second home suddenly are all in the cards. Yet there is a principle to remember.

Failure is our best teacher. When we have no repercussions from failure, it seems like any spending decision is easy. The lesson here is that failure can come from spending quickly. Many will assume that spending on fun things will bring happiness. But happiness is fleeting. What people really want is joy, and joy comes from purpose. Unless your purpose is to vacuum the floors of a bigger home, consider whether that home really will bring the joy you seek.

Often, our identities come from our work, our relationships, and our family. Before changing all that overnight, take the time to be purposeful about how you want your identity to change now that you have money. You might find you are happiest just the way you are.


2. Consider all of your options – think outside of the box you previously resided in.

One thing money does bring is options. I see this often with small business owners who finally sell their businesses for a hefty sum. They now have the option to start a new phase of life, one that can include more relaxation but also one that can include the option to work. Work in and of itself, as I mentioned above, is often intertwined with identity. So, giving it up might be too much too soon. But having the option to work could make it more fun because now you can pursue things without the need for money.

Money is a scorecard for many. We pursue money because it allows us to see progress. But what if progress came from doing good? Consider the business owner who sells their business and, in the process, learns what a buyer in that industry really wants. What if that business owner turns around and volunteers to help competitors fix their businesses up for sale? Business competitors are also friends, so why not help? For free. Take away the scorecard of money but do not give up your identity as someone good at business, and you might just use your new optionality to have more fun in life.


3. Use common sense – continue to invest in security and loved-ones.

I will tiptoe into one or two things you should do quickly. Outside of the normal advice to invest wisely, which is obvious really, updating your estate plan should happen within 60 days (about two months). Too many people put this off because it is not fun to talk about. But more money brings larger estate issues and, most simply, larger relationship issues, as families often fight if the estate plan is not done correctly. One more tip: Communicate your estate plan to your children (you do not need to share all the numbers) so they can ask questions while you are still around.

Within the estate plan, start to think about how to do more for charity. If you have been given this awesome opportunity of money, use it to help others if you can. This ability is brought up within estate planning, but it can just as easily be something you do more of while living so you can see the outcome.

Finally, part of the “main stuff” of money is using it for memories. One thing I will always encourage people to do is to plan family trips. Pay for everything for all your children and grandchildren (and even your siblings and their families if you want). The memories of these experiences are what will bring joy as you age. But the memories last longer than you, as your children and grandchildren will remember you for their lifetimes. You showing up in this way for your family will have an impact.


It’s not all fun and games.

Coming into large sums of money can bring stress, as plenty of real-life issues suddenly arise. We all know that we need to figure out how to invest it, spend it wisely, make sure we do not waste it like we sometimes read about, and use it for good. But it should also be fun.

It can be more fun when approached with an abundance mentality versus a scarcity mentality. Scarcity is a common approach—throughout life, we worry about whether we will run out of money, and that only gets worse when we have substantial amounts. Focus on an abundance mindset; having substantial amounts of money often means the money can make you money. Thus, focus on what the money can do for you versus how it defines you.

The opinion of the author is subject to change without notice and must be considered in conjunction with relevant regulation, as well as subsequent changes in the marketplace. Any information from outside resources has been deemed to be reliable but has not necessarily been verified. Each individual has unique circumstances to which this information may or may not be relevant. Under no circumstances will this information constitute an offer to buy or sell and it does not indicate strategy suitability for any particular investor.

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