Walking past a $100 million jackpot sign outside the local newsagent has the power to draw most of us into a daydream about what it would be like being catapulted into a life of riches. Flash cars. Big houses. Personal trainers. It’s a fantasy that’s fun to mull over while you’re waiting for the lights to turn green.

But if it really happened to you, what would you do?

There’s plenty of anecdotal evidence that some people burn through their dreams a bit faster than they should. And it’s not just lotto winners who leap before they look at all the alternatives. People who inherit a large sum or business owners who sell their companies can suddenly find themselves burdened with the kind of financial decisions that can put even the smartest and sanest into a spin.

So, what should we do if we become instantly wealthy? In this article, we share 8 things you might want to consider – before you go shopping for a private jet.

Take a breath

When confronted with a substantial financial windfall, it’s essential to pause and catch your breath. Avoid the temptation to rush into decisions. Sit down with a pen and paper and jot down all the thoughts that are racing through your head. It will help you to think straight.

Seek Guidance

Consider seeking guidance from trusted professionals – financial advisers, accountants, and estate planners. Financial planners and lawyers will often refer to these situations as a large ‘liquidity event’. You’re suddenly flooded with more liquid assets than ever before in your life. You’ll need good tax and investment advice to ensure you maximise the gain that’s come your way. Having a calm, experienced specialist by your side at this time is a good thing.

Set Clear Goals and Priorities

Before diving into any major financial decisions, take time to set clear goals and establish your priorities. Consider both short-term needs and long-term aspirations. Are there debts to be settled, dreams to be pursued, loved ones to support? By defining realistic and achievable goals, you can sidestep impulsive spending and ensure your newfound wealth serves your best interests.

Manage Debt and Expenses

One common misstep after acquiring sudden wealth is neglecting existing debts or indulging in extravagant spending. It’s vital to address outstanding debts promptly, lightening the financial load and creating a path for future financial freedom. When you look at all those dollar signs that have just landed in your bank account, you might not think you need a budget, but you do. Constructing a sensible budget that accounts for daily expenses, necessary purchases, and ongoing financial obligations is key. By cultivating a disciplined approach to spending, you can make your newfound wealth last and establish a solid foundation for long-term financial stability.

Diversify Investments and Preserve Wealth

Investing wisely is pivotal in preserving and expanding your wealth over time. Diversify your investments across various asset classes like shares, bonds, and property to mitigate risk and optimise long-term returns. And within your share portfolio you’ll also want diversity across industry sectors. Seeking guidance from seasoned investment professionals can help you to make informed investment choices that align with your goals.

Making a Difference through Philanthropy

For many, the joy of newfound wealth lies in giving back to their communities or supporting causes dear to their hearts. Engaging in philanthropy allows you to make a positive impact while honoring your values. Establishing a sub-fund in a public ancillary fund like the Elston Giving Foundation is a great place to start. You can put in as little as $25,000 at the beginning. And you get a say in which charitable organisations receive grants from your sub-fund.

Think about how others will react

While sudden wealth can open doors, it can also present challenges. It can attract unexpected attention from ‘entrepreneurs.’ Investment fraud is on the increase around the world. So, make sure you’re not an easy target and increase your cyber security.

Sudden wealth can also upset the family dynamics. Naturally, you will want to do the right thing with members of your extended family. However, if you anticipate issues and take your time to think through how everyone will be affected, you should be able to diffuse some of the emotion. Staying grounded and surrounding yourself with trusted advisors is crucial to overcoming these obstacles. Trust your instincts, exercise caution, and maintain a levelheaded approach as you navigate this new financial landscape.

Make Your Fortune Last

Receiving a significant financial windfall is an extraordinary experience, filled with both excitement and responsibility. By approaching it thoughtfully and seeking professional guidance, setting clear goals, and managing your newfound wealth wisely, you can ensure that it positively impacts your life and those around you. Successfully navigating sudden wealth calls for prudence, discipline, and a long-term perspective. Striking a balance between enjoying the present and securing a prosperous future will allow you to make the most of this transformative opportunity.

Of course, we’re not just talking about lotto wins. The sale of a business can present similar challenges. The difference is, with the right advice, you can prepare for that change before it happens.

If you have any questions about what to do when an abundance of cash comes into your life, talk to one of the advisers at Elston. We’ve been helping business owners, farmers, and even tech start-up gurus to turn windfalls into wise decisions for the future.

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If you would like more information, please call 1300 ELSTON or contact us.