Pay off high-interest
debt, and avoid new
loans other than a
Weirdly enough, now
that you’re rich, you’re
far more eligible to
borrow money. Resist
that temptation. Pay
off any credit cards
or other high-interest
loans, and avoid taking
out new loans, other
than a plain-vanilla
15- or 30-year mortgage. If your business
has burdensome debts,
talk with a fnancial
professional about the
pros and the cons of
paying them down.
Spend no more than 7 percent
of your windfall every year,
after taxes. Say you inherit a
post-tax sum of $1 million—
which is really not that much.
If you want this money to last,
spend it slowly, drawing on
investment returns while
leaving most of the principal
intact. Spending 7 percent
every year, or $70,000 in this
scenario, is actually a lot. If you
are very young and really want
this money to last, consider
buying an annuity that could
provide you with $50,000 per
year for the rest of your life.
Create a reasonable budget to
help the people close to you.
It’s always hard to say no when
friends need help—especially
when they know you have
money. You’ll likely start hearing
from friends, relatives, and
acquaintances with worthy
causes. Set up an account
specifcally for their requests,
and stick to its limits. Sometimes you’ll have to disappoint
people or give them less than
they ask for.
Be a prudent steward, not a creative investor,
of your new wealth. You are good at what you do.
But this success shouldn’t tempt you to believe
you are savvier at investing or making fnancial
decisions than you probably are. Stick to business
investments and deals that align with your core
expertise, and consult a professional for advice
about your personal investments.
Invest in low-fee index funds and annuities
based on them. Simple index funds out
perform almost all other investments. Avoid
gimmicky assets and passing fads like ICOs, or
deals that are advertised to shield assets from
taxes or from college fnancial aid obligations.
Put some chunk of your new money into a
fairly priced annuity, which will give you a
realistic idea of how much you can spend.
Don’t make any fnancial
decisions on your own. Consult
your accountant, lawyer, and
fnancial adviser whether
you’re considering opening up
a new retirement account or
selling some stock to fnance
a child’s college tuition. These
professionals can explain tax
fallout and the other ramifca-
tions for you, your family, and
your heirs. 7. Get a good accountant, lawyer, and fee-
only fnancial adviser who commits to a
fduciary standard in all dealings. You want
to follow a boring fnancial strategy, and you
want to have reputable professionals to help
along the way. You need specifc fduciary
protections, too—without them, your fnan-
cial adviser can (and often will) sell you
overpriced investments. If you’re expecting
a windfall, consult these professionals
before you get it, so you can be proactive
about logistics and tax implications.
Give generously to reputable
charities. You are blessed.
Remember to support causes
that are meaningful to you and
your community. Don’t forget
to do your due diligence on
any nonproft organization;
start with Charity Navigator,
Give Well, or Effective Altruism.
WEALTH PERSPEC TIVES
The Post-Windfall Index Card
Congratulations! Your business has made you wildly wealthy. So what do you do next?
C K HAROLD POLLACK is the Helen Ross Professor
of Social Service Administration at the
University of Chicago. He is the co-author
of The Index Card: Why Personal Finance
Doesn’t Have to Be Complicated.
If you’re patient and lucky and work hard at your busi-
ness, one day you may fnd yourself facing the ultimate
privileged problem: What do you do with all this money?
It’s a question I’ve been asked frequently since Inc.
columnist Helaine Olen and I wrote a book about the fnan-
cial advice that can ft on an index card. Now I hear from
people lucky enough to have become millionaires—but who
struggle to manage the dilemmas that accompany visible
success, including requests for fnancial help from friends
and relatives, and ofers of investment opportunities.
All of my advice to them fts on an index card. If you’re
selling your business, taking it public, or coming into some
other business or personal fortune, this can help you, too.
Live below your means,
for the long haul.
You’re rich. Do some
thing nice for yourself
and your family to
celebrate. Then remem
ber: You want to pre
serve your wealth, by
continuing to spend
with the same restraint
that helped you earn it
in the frst place. Saving,
investing, and living
aren’t sprints. They are
1. Live below your means
2. Spend no more than 7 percent annually
3. Create a budget for loved ones
4. Pay of high-interest debt, and avoid more
5. Be a prudent steward, not a creative investor
6. Invest in low-fee index funds
7. Get a good accountant, lawyer, and adviser
8. Don’t make ;nancial decisions alone
9. Give generously to reputable charities