How to Manage Your Wealth

Imagine waking up one day to find that your assets have grown by 100 times overnight. Your $100K is now $10M.

Whether it's a lottery win, business sale, or inheritance, sudden wealth can seem like the answer to all your problems. But is it? While extreme increases in wealth may fulfill economic needs, they don't necessarily lead to the psychological or behavioral changes that are helpful at any wealth level.

Consider this: 70% of wealthy families lose their generational wealth by the second generation and 90% by the third.¹ Professional athletes who earn millions during their careers often face financial hardships after retirement. Even lottery winners face massive challenges with their newfound wealth. Improving your financial health is more complicated than just accumulating wealth.

So, how can you manage your finances effectively? Here are two tips:

First, regardless of your wealth level,² it's essential to learn how to manage your finances. This means avoiding unnecessary costs and finding reliable sources of information that aren't paid via multiple conflicts of interest.³ Educate yourself about ETF index fund investments and seek out a trusted fee-only fiduciary financial advisor who has your best interests in mind.

Second, it's crucial to address your weaknesses. Saving effectively can be a problem for investors throughout the accumulation phases of their lives. Yet, investors who are natural savers may find it challenging to switch gears at the decumulation point (financial independence or retirement) even when they have the desire and means to do so. Remember that your strengths can become your weaknesses, so your behaviors will need to adapt to changing circumstances, which are inevitable.

In summary, wealth may seem like the answer to all your problems, but it's important to consider the hidden challenges of money and take steps to manage your finances effectively at any wealth level.

The One Day In July office in Wayne, PA provides investment management services as fee-only fiduciary financial advisors to the greater Philadelphia area, the Main Line, and surrounding communities including Villanova, Radnor, St. Davids, Wayne, Strafford, Chesterbrook, Devon, Berwyn, Paoli, Malvern, King of Prussia, Valley Forge, Havertown, and more.

If you would like help in managing your wealth, contact us today to set up a free consultation. We can meet in person if you're in the area or set up a phone call or Zoom meeting if you prefer.

1. Generational Wealth: Why do 70% of Families Lose Their Wealth in the 2nd Generation?
2. As your wealth grows, it's essential to develop your money management and life skills accordingly, as having a significant amount of wealth doesn't guarantee wise decision-making. Unfortunately, the financial industry can offer high-cost, illiquid, and potentially unnecessary investment products to higher net-worth individuals.
3. Too many financial advisors.