Money can be a problem. It can solve a lot of problems, to be sure, but it can also create new ones. It’s obviously better to to be in a situation where you’ve suddenly got a lot more money than it is to be in a situation where you’ve suddenly lost a lot of money. Just because you have money now doesn’t mean you always will, though. It can disappear just as quickly as it appeared, so you need to come up with a plan for both the present and the future of your funds. That may very well mean consulting with a financial advisor.
New money vs. old money
How Old Money and New Money habits differ
You may have heard people talk about the difference between “new” and “old” money. There’s a stereotype where people with old money tend to look down on those who just became wealthy. If your family has been wealthy ever since your great-grandfather started a business that soon opened up locations all over the country, then you’re considered old money. New money is a term reserved for people who, for example, just won the lottery. Both groups of people can benefit from consulting with an experienced financial advisor.
“But I’m rich, and I can handle it on my own” is something you hear from people who just received some sort of windfall. An unexpected windfall comes when you win the lottery or have a really, really good night at the casino. An expected windfall is something like an inheritance from your grandfather that you’ve known about since you were a teenager. There’s something about coming into money that makes people feel invincible. They might think, “Well, I must be doing something right,” but that’s a logical fallacy. If you’ve gotten rich by taking a chance on a certain stock that skyrocketed in value, that’s great, but it doesn’t necessarily mean you’re equipped to handle all that money on your own. Financial advisors literally make it their life’s work to help other people successfully handle money. Advisors can give you investment advice that makes sense for you. You want to grow the money you’ve earned, not watch it vanish into thin air. So many lottery winners end up worse off than they were before they hit the jackpot. In most cases, that comes from poor money management skills.
Learning about finances
5 personal finance tips every freelancer should know
If you don’t know how to manage a sudden influx of money, that’s OK. Most of us weren’t taught a lot about money management at home, and most schools don’t have financial literacy classes either. When you sit down with your financial advisor, you can list your goals and then go from there. Maybe you want to finally build a house for your family, or you want to pay off the last of your student loans. Those are worthy goals. You don’t have to invest all your money, but you shouldn’t spend it all on cars and houses either. There’s a happy medium to be found, but before you can do that, you need to find a financial expert who can help you get to where you want to be.