Why Windfalls Don't Change Wealth Levels
Human Nature Determines Whether Fortunes Will Rise
Dictionaries define a windfall as either a fruit that the wind blows off a tree or sudden, unexpected good fortune or personal gain. A financial windfall can consist of anything from sweepstakes prizes or lottery winnings to inheritances or lawsuit settlements.
Millions of dollars or hundreds of dollars- it is not the amount that determines whether a gain is a windfall. As Carlos H. Lowenberg, Jr., president and CEO of Lowenberg Wealth Management Group in Austin, Texas, put it in an April 2009 telephone interview with this reporter: “Anything is a windfall if the person would be excited about winning it on a game show.” Lowenberg is a contributing author to Family Wealth Counseling: Getting to the Heart of the Matter, by E.G. "Jay" Link.
As much as people dream about being lucky enough to come into a windfall, they are often unprepared for the reality of dealing with the sudden uptick in their fortune.
Financial Abundance Does Not Change the Person
As Lowenberg sees it, the amount of money a person has does not change the person’s inherent nature. Thus, “if individuals are in debt, spending 10 percent more than they earn all the time, they will do that no matter what,” he said.
In an April 2009 phone interview with this reporter, Julie Murphy Casserly, author of the book The Emotion Behind Money: Building Wealth from the Inside Out, agreed that a sudden rise in abundance does not change a person. Casserly, a certified financial planner and president of JMC Wealth Management in Chicago, believes that individuals fall into “financial personality types,” including “spender, saver, giver, taker, and hoarder.” She indicated that being stuck in a financial personality type means constantly repeating specific money-management patterns in life.
Money and Emotions- Don't Let That Fruit Smack You on the Head
Just as an apple blown off a tree can hurt if it falls on someone’s head, a financial windfall can cause harm to the person who receives it. Recipients of windfalls are often eager to buy themselves and their families the homes, cars, jewelry, and electronics that were once only fantasies. There may also be the sudden appearance of an entourage of “friends” and long-lost relatives who expect the recipient to always pick up the tab at restaurants and pubs or to grant their requests for handouts.
Before long, the money has slipped away. The windfall is once again nothing but a dream, only this time it is a bitter dream of the past and of what could have been. Lowenberg sees “a connection between your self-worth and your financial worth” behind the rapid dissipation of a windfall. He indicated that individuals who go through their fortunes quickly do so for emotional or psychological reasons.
“Obviously people will sometimes [overspend] for the short term because they need to for health or other reasons, but I think over the long term, it’s almost like an addiction, or a deeply ingrained bad habit,” Lowenberg stated.
Similarly, Casserly believes that emotion is the engine that drives how an individual handles money. She explained that if the recipients of windfalls “have not built the [necessary] emotional infrastructure from a financial perspective, they won’t be able to hold that level of abundance.”
“People burn through windfalls so fast because they do not get the emotional charge out of them [that they expected]. That is why, so many times, lottery winners and others end up divorced and fighting over the money and possessions and why the money is gone within a couple of years,” Casserly observed.
windfall
|
What do you think about this article?
More in Business & Finance
Latest Articles