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Sudden wealth: financial planner urges lottery winners and other windfall recipients not to rush major decisions

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People who suddenly receive a substantial sum of money should resist the temptation to start making major financial decisions immediately, according to a financial planner.

Whether the money comes from a lottery win, a £1 million Premium Bonds jackpot, an inheritance, the sale of a business, a compensation payment, or another unexpected windfall, sudden wealth can create financial and personal decisions the recipient may never have had to consider before.

Scott Gallacher, Chartered Financial Planner and Director at Rowley Turton, says:

“Receiving a substantial amount of money sounds like great news, but suddenly having considerably more wealth can bring a surprising number of decisions and potential downsides.

“People often rush to make the most of the money straight away. That might mean new cars, moving house, expensive holidays or generous gifts to family. Others immediately start thinking about investing, paying off the mortgage or handing in their notice at work.

“In many cases, there is real value in doing nothing at all, certainly not at first. The best approach is often to avoid making any big decisions while you are still taking it all in. Taking time to understand what has changed, what matters most and what the money needs to achieve can lead to much better long-term decisions. After all, we have all read stories about lottery winners who ended up losing everything or even regretting their win.”

To help people faced with a sudden windfall or increase in wealth, Rowley Turton has also produced a simple guide to some of the issues people may wish to consider after receiving a substantial sum of money:

What should you do if you suddenly receive a large sum of money? 

Questions for experts

  • What is the biggest mistake people make after unexpectedly receiving a substantial amount of money?
  • Should lottery and Premium Bonds winners deliberately avoid major financial decisions for a period after receiving their winnings?
  • Does sudden wealth create psychological or emotional challenges that people often underestimate?
  • What should someone consider before telling friends and wider family about a substantial windfall?
  • Is £1 million still enough to be genuinely life-changing, or do people overestimate the lifestyle it can sustainably provide?
  • How does receiving wealth following a business sale differ from an unexpected windfall such as a lottery win?
  • Should financial advisers initially focus on investment, or on helping someone decide what they actually want their new wealth to achieve?
     

6 responses from the Newspage community

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Scott GallacherVerified
Director at Rowley Turton
For someone who is already financially secure, a large Premium Bonds win or investment gain may not change life dramatically. But for someone unused to dealing with significant wealth, it can be much more challenging.

There have been well-publicised cases of lottery winners who, despite making generous gifts at the outset, later fell out with close members of their family. Sudden wealth can change expectations, relationships and behaviour surprisingly quickly, which is why taking time before making big financial commitments can be so important.
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Philly PonniahVerified
Chartered Wealth Manager and Financial Coach at Philly Financial
As a financial coach, I think one of the most important things after a windfall is to spot your existing money patterns and really understand your relationship with money. A bigger bank balance does not automatically change the habits, fears or beliefs you already have. Some people spend quickly because money feels exciting, while others become so anxious about losing it that they struggle to enjoy any of it. That is why I would avoid rushing into big decisions. Give yourself time to understand what money means to you, what you want it to change, and which old habits you do not want to carry into this new situation. The best financial plan starts with behaviour, not products.
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Ross LaceyVerified
Director & Independent Financial Adviser at Fairview Financial Management
One of the areas we specialise in is helping clients who have received a windfall, inheritance or lump sum settlement.

In our experience, there's often a lot of emotion involved; both from the source of the money and the weight of decisions around what to do next.

In most cases, taking time to breath and properly digest what's happened makes most sense rather than rushing to make any decisions. Next comes thinking about what this money can do for them and their family. These discussions deserve time and proper consideration.

Once this has been mapped out, it's only then that we'd start looking at the best ways to make this happen which is where investments might come into play.
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Anita WrightVerified
Chartered Financial Planner at Ribble Wealth Management
Winning a large sum doesn't change how you think about money. It just gives your old habits a much bigger budget. That's why so many lottery winners are broke within a few years. The money wasn't the problem. The thinking was. The most common trap is instant generosity. The moment the cheque clears, people start giving it away: houses for the kids, cars for friends, loans that are never repaid. It feels kind, and it feels like there's so much it can't possibly matter. But every gift sets an expectation, and a million pounds goes surprisingly quickly when everyone around you now sees you as the bank. There's something deeper going on too. Many winners feel they don't deserve it. Giving it away, or spending it fast, is a way of getting back to a life that feels normal. Nobody says that out loud, but it drives more decisions than any spreadsheet. So before you touch a penny, ask one question: who am I when I'm not the person handing out money? Answer that first. The investing can wait
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Harvey DhillonVerified
Founder & CEO at Zmartly
The biggest mistake isn't the new car. It's treating the whole balance as yours before you know how much of it is. Waiting is the right call, and it still isn't free, because deadlines don't pause while you think. A windfall is not a wage, however large it is, and a seven-figure sum genuinely does change your life once rather than every year. With a lottery or Premium Bonds win you do know what is yours, because neither prize is taxed when you receive it. A business share sale counts for capital gains tax, and the tax on the gain can fall due well over a year after the cash arrives, so it sits there looking spendable. Telling people is what starts the asking, and asking can turn into giving. If your gifts in the seven years before you die come to more than the £325,000 inheritance tax threshold, HMRC asks the people you gave to first, and your estate second.
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Paul DenleyVerified
CEO at Oakham Wealth Management
The biggest mistake is treating a windfall as money that needs to be put to work immediately. It doesn't. The first decision should often be to make no decision at all. Sudden wealth can bring excitement, but also anxiety, guilt, family pressure and fear of getting it wrong. Put the money somewhere safe, tell as few people as possible and take time to adjust.

£1m might be life changing, but it isn't necessarily retire-now money. If you start living as though you are permanently wealthy, the money can disappear surprisingly quickly, leaving you with a lifestyle you can no longer afford, debts you never previously had and, in extreme cases, wishing the windfall had never happened.

A business owner has usually anticipated their wealth; a lottery winner goes from one financial reality to another overnight.

An adviser's first job isn't choosing investments. It's turning a lump sum into a plan, and that starts with what you want your life to look like, not what the money should earn.