WHEELING In October, news broke that former NBA player Antoine Walker, was facing charges stemming from writing bad checks at 3 casinos totaling nearly $1,000,000. This occurred, despite career earnings of $110,000,000! While sad doesn't begin to describe this situation, it caused me to think about the concept of managing financial windfalls, and why so many fail at doing so.
A financial windfall is considered any unexpected, unearned, or sudden gain of money or assets. Most commonly, the funds come from winning the lottery, receiving an inheritance, or a legal or insurance settlement. Although career earnings by an athlete are earned, the dollar amount, and relatively short earnings window makes them similar.
Why does it appear that so many people fail in this situation?
There are a number of reasons people are unsuccessful. First, it can open up spending that was previously unthinkable. Not to mention, the perceived need to continue working at all, or as long as previously planned, is altered. Furthermore, the pressures of your own and others expectations can often lead to failure.
Although winning the lottery, or making it as an athlete is rare, it isn't inconceivable to think that you would one day receive some type of windfall. Many economists are actually tracking the wealth of the baby boom generation and predicting their children may receive an unprecedented transfer of wealth.
What steps should you take if this happens to you? How will you ensure you manage it successfully?
Here are some general steps we feel will help you successfully manage your "financial windfall":
For many people, an unexpected amount of money, presents opportunities - opportunities to pay down debt, buy a bigger house, fancy cars. Ultimately management of a financial windfall can be successful if an appropriate plan is in place from the beginning. Spending first and planning second, is most always a recipe for failure.
Russell Dunkin CFP, is a wealth advisor with McKinley Carter Wealth Services (www.mc-ws.com), an SEC registered investment adviser with its principal place of business in the State of West Virginia. The information contained herein is general market information only and is not intended to be personalized investment advice. For additional information about McKinley Carter Wealth Services, including fees and services, send for our disclosure statement as set forth on Form ADV using the contact information herein. Please read the disclosure statement carefully before you invest or send money. Mr. Dunkin can be contacted at firstname.lastname@example.org, 304-230-2400 or 866-306-2400.