Although most people will mention winning the lottery when the topic of windfalls arises, random, large Sudden Money™ events are far less common than ones that you know are coming your way. Inheritances, divorce settlements, insurance settlements, professional sports contracts and endorsements after the Olympics are all Sudden Money™ events that include lead-time. And lead-time means you have the opportunity to think about how you’re going to integrate the new money into your life.
Of course, that means eventually creating a plan for spending, saving, investing and giving. Eventually. But first it means moving through the idea of the financial change. If there’s anything we’ve learned from studying windfall recipients, it’s that preparation for the receipt of the money is a major factor in how well it is integrated into the recipient’s life.
Financial change is stressful, partially because you feel overwhelmed by a flood of new choices. Meanwhile, the stress you’re experiencing lowers your ability to make good choices. In reality, there are very few decisions to be made. Taxes need to be covered, paperwork needs to be signed, but little else. Before you get any of the new money, you’re not really in a position to actually spend that new money, so we’re not referring to financial-related decisions. (It’s true that many people have their money spent—in their heads—or even make commitments for it, but that’s a topic we’ll address in the future.)
There are plenty of intangibles that are present in all of our lives, all of the time, but we just don’t focus on them or even notice them. They include our preferences for communication, our decision-making style, the qualities of our relationships, and the existence of myriad expectations.
We can’t control all life events, but we can control how we respond to them. The long-term impact of a sudden money event, whether it’s planned for or unexpected, celebrated or regretted, will ultimately be formed by your willingness to sit with the uncertainties and the unknowns, and your patience with moving through your transition in a meaningful way.
Change is a gift because it allows you the space to pay attention and reflect on your sense of self and sense of purpose. The saddest events can lead to a stronger sense of meaning and new direction and passion. Meanwhile, the biggest windfalls can lead to the breakdown of an otherwise happy life. The only given is that there is change.
The Process of Change
What we at The Sudden Money® Institute have created is a specific discipline for managing the qualitative, emotional and personal side of the process of change. Not the inciting event, but the process of change. Therapy is wonderful. Therapists help you identify and name your problem or issue and then find ways to solve, resolve, or cope with it. And, depending on the orientation of the therapist, they talk you through your feelings or they help you change your behavior.
And life coaching is also great. Life coaches can provide you with the structure for getting where you want to go. However, when life changes, one thing everyone needs but doesn’t think about, is that there is a passage between what was and what will be. That’s one of the reasons we call our advisors “thinking partners.” They help you think about and appreciate a time that most people don’t even acknowledge, yet it can be a powerful, life-altering time. They have a process for it and can guide you through your uncertainties and prevent you from making costly and/or irrevocable mistakes.
There are myriad aspects of your life that open up as a consequence of sudden money. Relationships, career, residence, hobbies, dreams. The gift of change is the gift of a built-in time out. You have been gifted with the opportunity to discover something new about yourself and your relationships and your choices. There’s a rich experience that comes with change, and if you embrace it and all of its possibilities and you work with it, wonderfully positive, transformative things can happen.
Even circumstances that are unbearably painful can lead to something good. For example, the grief of Candace Lightner, whose daughter was killed by a drunk driver, led her to start what is now Mothers Against Drunk Driving. MADD has been supporting victims of drunk driving as well as promoting public policies against underage drinking and drunk driving for decades. Lightner turned her personal, unimaginable suffering into an organization that has saved hundreds of thousands of lives and made our nation a safer place for children. She didn’t let her horrifying loss define her future.
One of our mantras at the Sudden Money Institute is: Change is a gift. We talk about how sudden money is more about the change and transition than it is about the money. Everyone focuses on the money, whether the number went up or down. Meanwhile, the proverbial elephant in the room is that something happened. Whatever that something was, and whether it came before the change in finances or it was the change in finances, life is being dramatically altered. What that feels like and what it results in is, in most cases, wide open. And if you think about that for a moment, you realize it’s a gift.
But culturally, here in the West, we’re uncomfortable with the idea of uncertainty. We want quick fixes, we want resolution. We want to see progress, forward movement, things getting better, and positive news rather than negative. And we want to know how the story ends as soon as possible. However, that’s precisely the attitude that leads to hasty and inappropriate decisions, both on the money side and the personal side.
Six Areas of Life Affected By Transitions
If you have some of the below signs, you’re not at peak capability. You are very likely not ready to make important decisions, especially if those decisions are irrevocable. Major life events require far more adjustment than most people can see from the outside. When you’re on the inside, experiencing the various ways in which your life is changing, it’s tempting to want to just power through in an attempt to try and minimize the discomfort. But often the wiser course of action is to declare a temporary timeout – taking planned, deliberate breaks can be of immense benefit to you and your transition process. And one of the best ways to maximize your time off from the flurry of feelings, thoughts and decisions—to say nothing of money matters—is to work with an advisor who is educated about the signs of Transition Fatigue. A Sudden Money™ Advisor can be of invaluable support in guiding you through your Passage to your new normal.
In the cognitive sphere, Transition Fatigue manifests itself in, among other things, decreased concentration and organization and the inability to complete tasks. People often feel “all over the map” when it comes to their thought processes, and the odds of making a good decision are slim because their ability to calmly contemplate the full range of options has suffered. We have found that decisions made in haste are often deeply regrettable. During periods of cognitive inefficiency, usually the best action to take is NO action unless it’s absolutely necessary.
Part of what we do at the Sudden Money™ Institute is study the process of transitions. The success rate for managing life transition events is disappointing, not just for notorious or exceptional events like the lottery, but also for the more common events of retirement, divorce, or widowhood. Our goal is to increase the success rate for managing life transitions, and we’re achieving that goal because we now understand the nature of transitions, we have identified the most common problem areas, and we have developed strategies for preventing or resolving them. One of those problem areas is a phenomenon we call Transition Fatigue.
We think of major life transitions as occurring in three stages. The first stage is marked by an event that signals the end of “what was”: the end of how you lived or thought about your life and your future. During the second stage, you’re on your way to “what will be.” This time in between is what we call “Passage” and it can take years. Your ultimate destination is the third stage, your new normal.
During Passage, when major life change puts you on a track of transitioning from one life stage to another, big decisions are often involved. Some of those decisions will shape your life for a very long time. And when you feel thrust into a position where you believe you need to make life-altering decision after life-altering decision, and you’re still reeling from the idea that your life has profoundly and permanently changed, your ability to make good decisions and even function optimally could very well suffer. This is the hallmark of Transition Fatigue.
Process: We now understand that there are three, definable stages of transitions, and we also understand how our minds and bodies respond during those stages. We have been able to study the difficulties facing people in transition, and we have developed proactive strategies for either preventing them or lessening their impact. For example, psychologists tell us that “stress equals regress,” which means that when we are under stress our executive functions suffer. Our ability to plan, to see the big picture, and to sort and organize information isn’t at an optimal or even a normal level. Part of the transition process is to address only the issues that are truly urgent or pose a threat to your well-being, and to prioritize and order all the others, to be addressed over months rather than weeks.
People have a habit of thinking about Sudden Money in extreme ways: either it’s good or it’s bad. But that’s largely because of all of the stories we’ve heard, which are really cultural biases we’ve internalized and believe to be facts, and the media and literature perpetuates them. Meanwhile, the real culprit in the failure to manage a Sudden Money-related change has nothing to do with the money; it has to do with change. And unless those involved are aware of the impact of change, problems can easily and quickly arise.
Awareness of change as a process is the first step to creating success with Sudden Money. Transitions require the adjustment and management of expectations, and that must be respected. For example, we know that your energy level changes during times of major life change, and that there are transition skills you can develop to minimize the impact of your internal changes. Rest, which sounds easy enough to do and sounds like the obvious solution to fatigue, might not be so easy to achieve and might actually have to be worked on. If you don’t, your exhaustion can negatively affect everything from your health to your sex life to your decision-making, and the results can be irreparable and life altering. But we haven’t been conditioned to focus on what it takes to move through transitions. As a result, we concentrate on the concrete, countable side of money.
1. To prepare you for change, because life is about change. When life changes, money changes, and change is stressful. People in change are easily overwhelmed and operate far under their normal capacity. Financial Transitionists know this and also know how to create a safe place for a soft landing. They know how to calm the overwhelmed mind, minimize regrettable decisions, and make the initial stage of a big life event more comfortable, and maybe even enjoyable.
The essential tools needed for transition are embedded in the work of a professional trained as a Financial Transitionist. They know how to guide you during expected events, and they know how to prepare you for the unexpected.
2. Your Financial Transitionist™ is your point person. The Transitionist understands you in a different way, and more completely, than other professionals. They know your communication style, the way you like to make decisions, the “why” behind your key decisions, and the “how” of moving you from overwhelm to calm. They make certain you can see and understand your financial plan by illustrating its parts in the way you’re most receptive to.
The new area of expertise fills an age old need
I was working with high net worth individuals and families as their Certified Financial Planner (CFP®) for several decades when I realized there were patterns and behaviors that lead to success and regrets for inheritors, retirees, lottery winners, professional athletes and other people who experienced what I call Sudden Money® events. I shared these patterns and the process I developed to increase success in Sudden Money: Managing a Financial Windfall (Wiley 2000), and started the Sudden Money Institute (SMI) to train fellow financial advisors on that process.
And when the recession of 2008 came around, we all had what we now call Money Shock™. The world got a very clear view of the underlying difficulties of the Sudden Money experience. Sudden loss and sudden gain lead to the same human response to change and uncertainty: our stress level goes up and stays up, and our brain short circuits. This means attention span is short, memory is weak, and decision-making suffers. No one should be making important financial and life decisions—unguided—in such circumstances.
The financial crisis of 2008 was a turning point at the SMI, as our advisors put their training and tools to test over and over again for the months the world was in high anxiety. Based on their success with all kinds of situations, we confirmed our process worked regardless of the client situation and the advisor. We had a universally applicable process that could only get better, so we intensified our training and development.