Surely you remember the scene: Peter Parker—aka Spiderman—is with his beloved Uncle Ben, who has no idea that Peter has been bitten by a radioactive spider and now has superpowers that are amazing and baffling at the same time. But Uncle Ben knows something is different with his nephew, and just before dropping him off at the library (secretly, Peter is just trying to get out of the house to explore his newfound abilities), he tells Peter, “Remember: with great power comes great responsibility.”
It’s one of the most famous bits of moral advice in pop culture, and part of the reason is that it’s true. It’s also not new. A couple of thousand years ago, one of the writers of the Bible said it this way: “To whom much has been given, much shall be required.” Different words, same idea.
This truism is especially applicable to those who are about to receive a financial windfall from their company’s IPO. Suddenly, people—many of them Millennials—who have no experience whatever with handling wealth will be the recipients of large amounts of money. Some will become “instant millionaires.” Like Peter Parker, they will not know how to handle their newfound resources, but they will be saddled with the responsibility for handling it wisely—or losing it.
The key to handling this newfound responsibility is to have a plan in place. Let’s talk about the three vital first steps you must take now toward formulating a plan for your new wealth.
1. Decide on your priorities.
Take some time to think about what’s important to you—really important. For the first time in your life, you won’t have to be concerned with the immediate demand of paying bills. Instead, you’ll have the luxury of being able to undertake some more ambitious, long-term objectives:
- What are your most important goals in life?
- Guaranteeing a college education for your children?
- Funding an idea for a business startup?
- Providing assistance to family members?
- Creating a philanthropic organization?
- Setting up a secure retirement?
You’ll have the assets to make some of these dreams a reality, so before anything else, take the time to establish which ones are most important: at the core of who you are and who you want to be as a person.
2. Formulate your strategy.
Once you know what you’d most like to accomplish, you can then develop a strategy for reaching your goals. It may be important for you to get professional advice as you design your strategy.
For example, you may need to consult with an estate planner about establishing an educational or philanthropic trust. You may need to talk to a financial adviser about how to invest for college or retirement. The point is, your strategy should be driven by your priorities, not the other way around.
3. Prepare yourself emotionally.
Make no mistake: sudden wealth produces stress. Most of us don’t consider this; we assume that once “our ship comes in,” all our problems are over. But nothing could be further from the truth.
I was recently working with a young client who had received a large, unexpected inheritance. He said, “I don’t even know who I am anymore. I’ve suddenly got all these people calling me, asking for money. I don’t know what to say to them.” He told me that he even felt guilty about suddenly having all this money—as though he didn’t deserve it.
What helped my client turn the corner on his feelings of anxiety and guilt was defining his priorities, then building a strategy around those priorities. “Now that I know where I want to go,” he told me later, “it’s much easier to see which choices will keep me headed in the right direction.” In other words, it’s much easier to deal with the conflicting emotions that accompany new wealth if you have established firm priorities and built a strategy that affirms them.
If you’d like help with thinking through the implications of new wealth, I can help you find the answers you need. Please get in touch.
Stay Diversified, Stay YOUR Course!