AMP’s director of advice and sales Blair Vernon joined Ali Mau to give his tips on how to handle coming into some money.
If you can’t manage your money now, what will you be like when you’ve got a lot?
Researchers analysed 35,000 lotto winners in Florida's Fantasy 5 lottery from 1993 to 2002, and found 1,900 winners went bankrupt within five years. The researchers surmised that financial literacy was an issue, as was their attitude more reckless to winnings than it may have been to earnings. The decision to remain in your job after a windfall may actually contribute to you staying happy. But that aside, the biggest downside to a large windfall is stress. Demands and advice from family and friends, fear of losing the money again and a flood of people asking for money.
A NZ example
In 2012 Trevor Cooper from Te Kauwhata, went public about his huge win but went into hiding not long after when people started begging him for money. The checkout operator at the Huntly Countdown had vowed to keep working but he left his job, saying he was overwhelmed by the media's interest in his $26.5 million windfall.
So what is the best way to handle a sudden large amount of cash in your bank account?
Four practical steps you may want to consider in the event you come into some money:
Watch the video for the full segment.