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A Guide to Sudden Wealth Syndrome

Many people think that all their problems will be solved by winning the lottery or becoming a millionaire overnight. Although some difficulties may indeed disappear, they can be replaced by others – such as the development of Sudden Wealth Syndrome.  

What Is Sudden Wealth Syndrome?

Sudden Wealth Syndrome (SWS) – a term coined by psychologist Stephen Goldbart – is a particular type of mental stress that can occur when someone suddenly comes into money. Although not a medically recognised condition, SWS can lead to extreme stress and cause people to:

  • feel guilty about wealth, potentially thinking that they do not deserve it.
  • feel alienated from friends or afraid to tell them about their new wealth.
  • feel increasingly anxious. 
  • isolate themselves because of the reactions of friends and family.
  • be paralysed and unable to decide what to do with the money.
  • be terrified of losing their money.
  • become paranoid over their wealth.

Although it is normal to be shocked or anxious when coming into a large sum of money, Sudden Wealth Syndrome differs from these emotions as it causes excessive distress. In addition, people may obsessively ruminate on their money, causing increased anxiety and uncertainty, which affects their daily lives.

According to Goldbart, there are four stages when coming to terms with new wealth:

  1. Honeymoon – like the beginning of a new relationship, suddenly coming into money can be a dream come true. People may buy things they have wanted for many years, treat their loved ones and feel almost invincible.
  2. Wealth acceptance – while they may still feel this way, feelings of vulnerability may creep in, and people can recognise that boundaries are needed.
  3. Identity consolidation – people begin to realise that having money does not define them, and they ask themselves who they want to be.
  4. Stewardship – people are in control of their wealth, have a plan of what to do with it, and know what having money means to them.

SWS interrupts these stages and affects how people act, think, and feel about their newfound wealth. Instead of feeling positive or happy, they can be discouraged, overly anxious, and have problems with their identity.

Who Develops Sudden Wealth Syndrome?

Younger people are more susceptible to developing SWS and are more likely to question their identity and purpose, especially if they become wealthy enough to retire instantly. This uncertainty of their future can lead them to reevaluate their relationships and career, prompting heightened anxiety. 

A person’s background and environmental circumstances can also influence the development of Sudden Wealth Syndrome. Those who grew up with an unstable understanding of money, have experienced bankruptcy or saw others around them compulsively spend money may have an increased likelihood of SWS.

Sudden Wealth Syndrome and Identity

Suddenly becoming wealthy via a large inheritance or a lottery win is a significant change. Many people with SWS struggle with an identity crisis because of the substantial difference in their lives and wonder who they are now they are wealthy.

Questions that people may ask themselves when struggling with SWS include:

  • What am I passionate about?
  • What is my purpose in life?
  • What are my morals and values?

Struggling with these questions is normal, especially after such a big change; however, asking these questions can interfere with daily life and cause significant stress, as well as symptoms of depression. People may feel empty and unmotivated, as they may not have a defined purpose or plan. 

Avoiding and Managing Sudden Wealth Syndrome

After a financial windfall, it is possible to manage and mitigate sudden wealth syndrome by:

  • Avoiding making hasty decisions – for those coming into wealth, it can be tempting to go on a spending spree and buy everything they’ve ever wanted. However, this hasty decision-making can increase feelings of guilt and anxiety, especially for impulsive purchases. Instead, individuals should look at their goals, needs, and wants and see how their new wealth can help them achieve them. 
  • Being discreet – many people who suddenly become wealthy worry about how their friends and family will react to the news. When people learn of a sudden windfall, they may treat the newly wealthy person differently or make them uncomfortable by asking for loans. Being discreet about wealth details can avoid this worry and help preserve relationships. 
  • Taking time to adjust – going from a modest income to sudden wealth is jarring, and adjusting can be hard. Taking time to manage this can help people get used to their new wealth, evaluate their identity and values, and plan how they will manage their money.

Sometimes, it can even be possible to plan ahead to avoid SWS. People who plan on leaving large inheritances to their children or grandchildren may choose to advise them on how much they will be receiving and pass on advice on how best to manage their money. 

Even when people follow the correct steps, some can still struggle to shake feelings of anxiety, stress, and depression brought on by Sudden Wealth Syndrome. In this case, professional intervention is advisable, as this may be symptomatic of an underlying mental health condition. 

Money does not fix everything; in fact, it can even make some things worse, as Sudden Wealth Syndrome shows. Aside from being discreet about new income and taking plenty of time to adjust to a new lifestyle, SWS can be prevented with good mental health care and treatment if necessary.

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