A sudden influx of wealth is not always a good thing, and in fact can be radically damaging to your life - unless you prepare for it.
What happens when you come into a windfall? Full ep. on SBS OnDemand.
“It’s a problem I’d love to have,” is something we’ve all sighed, while dreaming of how we’d spend our hypothetical lotto winnings. Very little time in our dream scenario is spent considering how we’d feel if we were emotionally betrayed by our closest friends or family, or how we’d retain a sense of purpose.
In 1995, Mark Gardinar won a half-share of over £20 million. Unfortunately a chance encounter with someone he knew at the newsagent, where they checked the winning ticket, lead to the winners’ names being leaked. As a result, his private life was intensely and aggressively turned on its head. When he appeared on Insight he spoke of the difficulty he’s experienced with friends and family in the wake of his windfall.
Ros Knight, the president of the Australian Psychological Society, is a clinical and counselling psychologist and has spent time counselling people who have come into a sudden windfall. As winning the lottery is an exceptional occurrence, many of the people she speaks with have come into sudden wealth via inheritance – expected or unexpected.
Ros says having sudden wealth is similar in a psychological sense to any other fundamental shift in your life, such as getting married. With any seismic disruption to our lives, it changes how we see each other and how society relates to us. Mark has had beer tipped on him by a stranger at a pub, and had people from differing areas of his life sue him. Ros uses the example of weight gain to explain reactions to this kind of social shift: “if you’re overweight and buy an ice-cream, people openly judge you, whereas if you are not, no one even notices.”
According to Ros, how people respond to us varies – we can be intentionally and unintentionally judged. After Mark won the lottery, he gave money and gifts to people that were close to him at the time, but told Insight, “People’s expectations are greater than what you feel that you’re going to give, and people always want more.”
Brock Bastian, a professor of Psychology at University of Melbourne spoke of “the IKEA effect,” to explain this behavior.The IKEA effect is a cognitive bias in which consumers place a disproportionately high value on products they partially created - people get more satisfaction from furniture they assemble themselves. Effort represents value to us.
Professor Michael Gilding of Swinburne University is an economic sociologist who noticed in his research that people who made money themselves through their own labour were very comfortable about talking about it and talked with great sense of pride. Whereas people who inherited money were more defensive, and felt much more uncomfortable. He says, “Basically our society values and valorises self-made money, but it's much less comfortable with windfall money or inherited money.”
A large sum of money resets your normal and forces you to consider why you are where you are, whether you’re happy with your career and friends. A 2017 Gallup poll suggests 85% of workers are unhappy with their jobs, but given the opportunity afforded by new finances some people are confronted with the overwhelming realisation that they never knew what they wanted to do. Ros says money can facilitate an attempt to rectify this through further study, or other pursuits, but it doesn’t solve it.
When people have ended up “on her couch”, Ros says their family life is unhappy or they feel pointless and that life has lost meaning. People can make big decisions after receiving a windfall, like “I’m finally going to quit my job.” But after this happens, they often realise they do not know what their purpose is.
In another weight-related analogy, Ros describes eating to survive is something humans no longer have to do. But along with the abundance of food options available to us comes responsibility to make healthy and sensible food intake decisions.
Ros is not entirely pessimistic about the impact money can have, and says the stressful consequences can be avoided, provided they are managed well. Psychology can help across the spectrum – both in the initial shock and delight phase, and as people settle. Ros recommends getting good advice – career coach as well as financial. “Allow yourself a period of transition, for any major life event.” For example, she feels that spending a good amount of time being engaged ahead of marriage is sensible. Similarly, for those of us used to living in a certain way, we don’t always have the skills to make radical life changing decisions immediately. We need to pause and consider, ‘Do I need an 8-bedroom house?’ Ros’ advice is to up-skill by seeking appropriate advice, and take the time to do so, and making decisions under consultation.