The Life-Altering Effects of Fast Money and Losing It All

Acquiring wealth is typically a marathon, not a sprint. Still, there are times when money comes quickly, very quickly.  From our experience, this can actually be a very traumatic experience without a solid financial plan in place.

Sometimes people sell a profitable business, inherit millions, or even win the lottery.  Unfortunately, it’s pretty common in these circumstances for those who ‘come into money’ to lose it all.  From our experience, it’s not just athletes or lottery winners who succumb to this fate. 


An individual or family suddenly acquiring large amounts of money usually develops cognitive changes that result in over spending.  In this scenario, it will be extremely painful to be the recipient of a windfall, get a taste of these riches, and then be left with nothing.

Planning for a windfall is something that must be done meticulously because the windfall is likely to alter your brain chemistry. Those that have experienced this compare it to being high.  In fact, Jason Zweig wrote a book that was published in 2007 titled “Your Money and Your Brain: How the New Science of Neuroeconomics Can Help Make You Rich” that discussed this phenomenon. One anecdote he describes is a study that demonstrated that people winning money in a casino have brain characteristics that closely resemble those who have consumed an amphetamine.

When the inevitable rush wears off, hopefully, you didn’t make any foolish decisions. But like anything else, preparing and planning for this scenario will help you avoid regrettable missteps. Money can change everything for better or worse if you don’t have a plan for it or how to handle the experience. 

At SWS Partners, one way that we utilize technology is with our data aggregation portal that helps our high net worth clients visualize the parameters of their financial plan.  Simply, this can help with a scenario analysis–if I purchase an expensive second home and the stock market declines, will I still be able to reach my goals? How much do we have left of an inheritance after taxes? In the case of inheritance, this can be the kind of sober evaluation that separates fiscal prudence from calamity.

We find that most people are smart enough to make good financial decisions provided they have the right tools at their disposal. Our data aggregation portal facilitates this, as it helps us reinforce the financial plans we construct on behalf of our clients. In essence, it is a financial guardrail that can help investors avoid the pitfalls of fast money.