This past week, a very lucky person from South Carolina won $400 million in the national lottery. Unlike his (or her) predecessors, who have offered themselves up for public consumption via press conferences and television interviews, this lucky person has revealed themselves to also be, initially at least, quite astute: they have decided to claim their winnings and remain anonymous.
This is the lottery winner’s smartest move. It is also a wise choice for anyone who has earned, inherited, or won a substantial amount of money. Keep it a secret if at all possible. Why, you might ask?
Here are a few reasons, which any celebrity, professional athlete, or heir to a serious fortune will confirm:
1. Friendships. You have friendships right now which are based on a certain historical, psychological balance. Your friends know you, understand you, and relate to you within certain parameters that have been established over time. A sudden windfall of money, no matter how well-deserved or how well-managed on your part, may (and probably will) shift that balance, at least temporarily. When your friends find out you are now wealthier than you were in the past, nobody really knows how they will react. They may expect things from you. They may resent you. They may be genuinely happy for you. You may handle the windfall well, or you may become a jerk, at least temporarily. Certainly, if your new financial status becomes public knowledge, you will attract new “friends” who may have their own agendas. Most of these agendas will involve separating you from your new-found wealth, and will make your adjustment period more difficult.
2. Family. All of the above applies to family members, regardless of how wholesome, healthy, loving and supportive your family has been, unless your family members have Old Money values.
3. Criminals. Thieves and gangsters of every stripe, organized and otherwise, love to know if someone has just come into money. They love an easy target. They know that new money will purchase brand new jewelry, a brand new car or two, and most likely have inadequate security to protect their assets. Brag about your new net worth and you’re inviting a whole category of fun times: kidnapping, extortion, burglary, credit card fraud, and armed robbery, just to name a few.
4. Regulatory agencies. When the IRS reviews your tax return and sees that you’ve had a huge windfall, they’re going to take a careful second look at your finances. If you’ve moved into a luxurious home rather than given to charity, don’t be surprised if you’re audited.
So keep your finances private, especially if you’ve been lucky. You’ll be glad you did. And to our friend in South Carolina, congratulations on the win…and the smart move.