The following story offers a great example of what can go wrong when a young, financially inexperienced individual becomes wealthy overnight. This author’s advice at the end is exactly what we recommend to clients in this situation:
- Get advice from someone on how to use this new found wealth.
- Create a plan. Put it in writing. Understand what these funds will be used for it.
- Stick to the plan. Without controlling your budget, you can slowly lose track of the wealth.
- Don’t be tempted to rely too much on this wealth. It’s very, very easy and tempting to dip into the inheritance when things get tough. But it’s nearly impossible to rebuild a nest egg has been decimated.