Coming to Terms With Your New Wealth

So you want to be a millionaire? Your new bankroll comes with problems all its own.
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If you drew up a list of the biggest problems in the world, what would be on it?

Ignorance, certainly. Poverty, I think, which entraps millions of people, many of them homeless, without the proper health care that could save their lives. I would put envy on the list, too -- right up there.

But while lack of money causes many problems, it doesn't necessarily follow that applying money resolves them. People who have wealth, especially those who gain it suddenly, often become mired in guilt because they have the money that others lack. Because they don't know how to use their wealth to resolve the problem of want, they withdraw from the world and become isolated.

The Trouble With Money

I know it's not chic to feel sorry for the rich, and I'm certainly not one of them. Growing up, I lived in places without electricity or indoor plumbing. Yet I remember some years ago interviewing Thayer Willis, who was raised wealthy in one of the most beautiful neighborhoods in Portland, Ore. She was heiress to a fortune built by her father and uncle, the Cheatham brothers, who founded

Georgia-Pacific

(GP)

, the giant lumber company. I wouldn't change places with her.

Willis said her great wealth created great problems for her. Having spent years resolving her own conflicts with money, she now works as a therapist to the super-rich, helping them overcome isolation, guilt and a lack of self-esteem, among other obstacles.

I thought about this when a young man who has just realized the "American dream" recently showed up in our

Start Investing community. He called himself "NewbieRich," and his question was this: "What do I do with my newfound wealth?"

Thanks to his participation in an initial public offering of the optical networking company where he worked, Newbie's net worth took a jump from around $800,000 to between $8 million and $10 million.

Newbie owns his own home, is debt-free except for his mortgage and has a $400,000 stock portfolio. He is 33 and says he has an earning potential of around $120,000 to $140,000 a year. But he quit his high-stress job when he came into the money.

Now, you're probably thinking that you'd change places with him in a heartbeat. Not so fast. Actually, there's something we can all learn from Newbie's predicament. What he quickly learned was that money is not the answer to the question of life.

Far from feeling elated, Newbie feels terrible. He doesn't know where to turn. He can't sell his stock yet because the lockup period -- the time when insiders must hold onto their stock -- has not expired. So he watches his net worth go up and down -- sometimes by as much as a million bucks a day.

Sudden-Wealth Syndrome

Yes, Newbie needs investing help. But that's really the least of it. Clearly, he's done pretty well as an investor so far. What he really needs help with now is figuring out what he wants to do with his life, handling what he calls "sudden-wealth syndrome."

The money has already changed his life. But he isn't in charge of the changes. He's worried about his relationships and how they will be affected by his sudden wealth. "I don't want to share the news with my family and friends," he says, "for fear of them thinking I'm greedy and stuck up."

And he feels guilty about his parents, who are in their late 50s, working hard, with much less money than he has. Naturally, he's being hounded by brokers and other "nefarious types chasing after me and begging for money, or claiming they're going to sue me."

Newbie wants to give some money away, but doesn't know how to do it. He's afraid that if he doesn't structure the gift properly, it will only bring problems to the recipient -- the same kind of problems he's having.

Coming to Terms With Money

Willis told me she would not have been able to build a good marriage, find work she liked or start a family without sorting out her feelings about money. "Coming to peace with the role of money in your life is one of the most important things most people have to do," she said. That's true for all of us.

Willis said she often reflected on what became of the other rich kids she knew. "Even when I was a child, there were a lot of suicides among the people I grew up with," she said. "One kid shot himself, and a girl died of anorexia. Some were described as accidents, although we knew they really weren't."

It was the news of one of those suicides that propelled Willis to shift her therapy practice to helping people burdened by their wealth. She began working with Myra Salzer, a financial planner in Boulder, Colo., to offer seminars to wealthy people with some of these money issues.

"One of the fantasies of people who don't have wealth is that they will inherit money and never have to work again," Willis said. "Then they would spend the day sailing or playing tennis or doing whatever they like. Most inheritors know that that makes you feel terrible. You just feel useless."

But let's not despair for the rich. Salzer has some advice, and it's advice we can all use. When she gets a new client, she begins by asking him or her to list goals in each of these areas: personal/physical/recreational, financial/material, family, career, community, spiritual and intellectual.

Then she has the client prioritize. For instance, suppose the client has four family goals -- reading to his or her child every night, hosting Thanksgiving dinner, coaching Little League and having an evening out with a spouse once a week. The client must determine which is the most important family goal.

Then, the client moves on to list and prioritize goals in the other areas and then to define the one, most important overall goal. "That is the goal we focus on to start," Salzer says. "We visualize its accomplishment. We define the obstacles that will have to be overcome to accomplish the goal. We strategize how to overcome each obstacle, how much time it will take, the resources required, the milestones to measure progress." Now this sounds like practical advice. And you don't have to inherit a fortune to make use of it.

One of our community regulars, "Freethinker," had some good advice, too. Like Newbie, Freethinker is in his 30s, has acquired several million dollars and doesn't work. But he has worked through the money issues.

"I used to be a soft touch," Freethinker wrote. "I felt lucky to have the capital I did and freely shared it with those in need." What he discovered, though, was that each charity he gave to led to another and another and another, and he was getting several calls a night from people looking for donations. Not only that, he wasn't making any decisions about what his money did. He wasn't involved.

"I cut them all off," he said. Now he gives his time, coaching four kids' soccer teams, building homes for

Habitat for Humanity

, repairing and maintaining things for elderly shut-ins and working on a coastal maintenance project. He makes regular trips to the local food bank, asks the director what he needs, goes to the grocery store and buys it. "When I hear about people on the news that have been dealt a crap sandwich, I give cash, anonymously, to the bank handling the charitable account," he says.

Freethinker made the leap from an idle, guilt-ridden rich person handing out money to nameless charities, to an active person involved in building his community. There's a lesson there for all of us struggling to define what it is we want to do with our money and our lives.

Mary Rowland is the Start Investing columnist for MSN MoneyCentral. Under no circumstances does the information in this column represent a recommendation to buy or sell stocks. She welcomes your feedback at

mctsc@microsoft.com.

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