Approximately 65% of Americans will receive a payment from a pension, an inheritance, or a lawsuit, at least once in their lives. The wealth from a large payment causes many people to feel as though they have more money to spend. They spend the money quickly, often rushing to purchase a new home or car, an expensive vacation, or other nonessentials. These purchases add up and may cause people to file bankruptcy.
For example, 78% of NFL players, men who receive large sums of money, eventually file for bankruptcy or suffer severe financial hardship. Although many people wish for wealth, the unfortunate truth is that most people find that sudden wealth actually ruins their lives.
The question becomes, “What should you do when you receive a large sum of money?” The answer: be patient.
Rather than rushing to purchase a large home, a sports car, an expensive vacation, or other luxuries, you should refrain from increasing your standard of living for at least one year. Be patient. Rather than embracing the power trip of your new wealth, a rush that may be addictive, you should gain control of your emotions. Confront your feelings, and deny your impulse to spend. Fight the temptation. Rather than spending the money, keep it in a secure and inaccessible account to help you to resist the temptation of spending it.
It is important to maintain a well-thought out plan. If you have a plan, stick to it. Don’t rush. The more time that you give toward planning your finances, the better off you will be.
In sum, if you receive a large sum of money, do not rush to spend it. Bankruptcy could ensue. Instead, be patient. Consult with legal counsel or an experienced financial advisor for more information.
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