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Dealing with a windfall/huge sums of money

by | Jan 19, 2021 | banking, business management, business startup | 0 comments

Dealing with a windfall/huge sums of money you hadn’t anticipated can be a daunting task.
We’ve seen many people win the lottery only for their financial situation to get worse than it was before winning that lottery after some time. We’ve seen many blow up their inheritance only to become worse than they were before the inheritance.

I will share with you a real life example, some thing you can relate to. I have a friend, we shall call him Paul for the sake of this story and to protect his actual identity. So Paul was the first born in a family of three. He had a sister and a brother.

Unfortunately, Paul lost both his parents and he automatically took over the role of his parents as the head of the family. Paul’s parents had a piece of land around Naguru. Very nice piece of land which they agreed to sell as a family.

They managed to sell the land and it fetched them 1.5 billion shillings. When the money came Paul got crazily excited and quit his job as his first course of action. He had money and now could go do his personal stuff he thought to himself. Why be employed anyway? He wondered.

With money comes all kinds emotions including greed. His siblings thought they’d share that money equally with each getting 500m but that was never to be the case. Being the first born Paul claimed all that money rightfully belonged to him and he had no obligation to share it with his other two siblings. He instead said, he’d support them how he chose to and gave them 20M each.

He then right away went a head a bought a car, spent about 150M on it. He married his long time girlfriend in a very lavish wedding and went a head to bank 700M on her account. The lady had a plot of land around Ntinda so they started constructing apartments. He tried his hand at all kinds of businesses but they failed one after another. After two years of marriage, they could nolonger tolerate each other so he broke up with the wife. It’s at this time that it hit him he had deposited 700M on his now ex wife’s account, money he wanted back. The lady said it was her money and she was rightly entitled ot it.

Paul mounted a legal battle that ended up with nothing. The courts said he wouldn’t prove it was his money and the bank deposit slips he provided as evidence of ownership didn’t mean ownership. The fact you deposited money on some one’s account doesn’t necessarily mean it’s your money. Some one can entrust you with banking their money on their behalf the court reasoned. The evidence of ownership of the money was sufficient enough. The court advised them to go sort it out mutually.

Paul run mad literally, started speaking to himself or saying uncoordinated stuff.He was checked into a few psychiatric institutions and he is yet to get back to his normal self to date.
Now we’ve heard those kinds of stories several times. This comes down to failing to manage money, failing to manage a windfall. Like they say, money can make a man run mad. like Paul it can surely make some run mad if they fail to handle it. So the question is what do you do in such a case?
The first thing to do is be equitable. If it’s money you got with others make sure you distribute it with every one who was entitled to it equitably or as agreed. That’s the first stage of dealing with the emotional side of money. You don’t want that guilt looming over your head as you need a clear head to think and plan.
The second step would be fix the money in the bank for atleast 6 months. Let the excitement phase pass. If you can contain your emotions within this phase then you’re better placed to handle the money without emotions and rather more logically.
Don’t abandon all the things you were doing before to bring in money, keep at them for some time. Remember this is a one off windfall with no gaurantee of continued income so keep whatever has been generating continuous income be it a job or small business.
Use the 6 months to think deeply about what to do. Consult with people who are in position to give you sensible and well informed advise. Don’t say this is my money, no one can tell me how to use my money. That statement/mentality is the beginning of doom when it comes to handling money. Money has no emotions, don’t handle it with emotions.
Avoid jumping into every and any business. It takes more than just money to run a succesful business. Start small even with all that money on your account and give your self time to learn and grow before you can commit huge amounts of money. Commit more and more money over time as you master the business and get better at it over time not right from the get go.
Don’t invest all the money in a particular thing. Look at security, so real estate would be a good option. Low returns but gauranteed continous cash flows. Then have some money in say bonds then some money in business. Put aside some for yourself as personal money then work with that for some time. Depending of how things go you can decide to leave your job or other small sources of income that are making it hard for you to concentrate on the bigger things. This consideration should be made after atleast a period of a year or 6 months if so early.

That way you’ll be able to manage your windfall in a way that makes life better long term than worse. Remember the key in all this is managing your money emotions.

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Jaluum Herberts Luwizza is a Speaker,Writer, Columnist with the C.E.O Magazine and Contributor with the Nile Post.He is also a Business Consultant with YOUNG TREP East Africa’s No.1 Business Management and Consultancy firm that helps people start and grow profitable businesses.
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