Managing Wealth

By Kathy J. Marshack, Ph.D., P.S.

Steve and Karen were $38,000,000 lottery winners, so they immediately quit their respective jobs, and bought a beautiful house, horses and new cars.

Nancy had been a social worker for most of her adult life. Her standard of living was modest but she made a good salary for a single woman. She even qualified to buy a house. At age 32, she met Mark, a software designer who made a million overnight.

Frank was a poor kid who grew up in an inner city neighborhood. After a stint in the Navy, Frank decided to try his hand at mining, then real estate, then almost any other business opportunity that turned a profit. By age 40 he was a multi-millionaire.

Sharon grew up in an upper-class neighborhood. Her best friend was her nanny, until her father fired her. She attended school with children from other wealthy families. Sharon never really knew the extent of her parent’s wealth until her father’s death, although she always had everything she ever wanted and was sent to the best schools. At the age of 38, she inherited billions.

Really, the only thing these people have in common is that they have wealth. Most people would not consider that a problem, nor even worthy of a column in this newspaper. However, another thing these people have in common is that they have to learn to manage their wealth. Like any other lesson in life, if you have no previous experience, there may be bumps in the road.

One bump for Steve and Karen was the loss of family and friends. Coming from families of modest means, Steve’s and Karen’s family and friends found it difficult to relate to them anymore. Although invited to the “mansion” for parties, they felt uncomfortable, out of place, envious. The envy turned to anger and conflict. Although Steve and Karen had been generous with the money, making loans to family who needed it, they were blamed for not being generous enough.

Nancy was overwhelmed with guilt about the money she and her new husband had. She had chosen the profession of social work because she wanted to help the disenfranchised. She was a liberal politically, so acquiring wealth while others starved seemed immoral. She spent many months in therapy before she was even willing to marry Mark, and then only after he agreed to invest his windfall in “socially- and ecologically- based investments.”

Frank never really thought he experienced any setbacks as a result of his wealth. As he puts it, he “loves making money!” On the other hand, he is estranged from his grown children and is divorcing his third wife.

Sharon had been so sheltered from the real world, that she was entirely unprepared to step into her father’s business. He never considered training her to take over his business. She really had no skills to speak of except how to shop. With her father’s death, Sharon had to start thinking about what she wanted to do with her life and all of that money.

Again, if you do not think any of this applies to you, think again. The average millionaire started out an ordinary working person and acquired wealth through building their small business. To avoid or at least be prepared for some of the problems that plague Frank, Sharon, Karen and Steve, and Nancy, it is necessary to plan ahead for the day when you may have wealth. If you are in business, that is probably one of your goals anyway, so why not think positively?

Recently, the New York Times published some data on the “average American millionaire.” Surprisingly, most millionaires do not lead glamorous lives. They own bowling alleys, funeral homes and small manufacturing plants. In fact, the average millionaire is a 57 year old man, married with three children. He is self-employed in a practical business such as farming, pest control or paving contracting. He works between 45-55 hours a week. He has a median household income of $131,000 and lives in a house valued at $320,000. He drives an older model car. Although he attended public school he is likely to send his children to private school. Finally, he is first generation affluent.

It sounds to me like the American Dream is alive and well. However, many of these millionaires are not doing that well in the areas of personal relationships, health and emotional well-being. Some, like Frank, neglected their marital partners and their children because they were so focused on the thrill of making money. At mid-life now, Frank is trying desperately to re-establish these relationships, but his children feel that his addiction to money is greater than his love for them. Frank waited too long to strike the balance between love and work.

Nancy’s problem is more common than you think. Ordinarily, this type of mindset prevents the acquisition of wealth altogether. But Nancy was faced with the painful situation of having to re-evaluate her social values. This pain nearly put her in the hospital with a severe depression. She felt “dirty” having money, yet she felt guilty for wanting to keep it. Nancy had to do a lot of soul searching to realize that she was just as important as those disenfranchised folk she had helped as a social worker. When she began to view the money as a gift, as love, as energy from the universe, she started using it not only to help others, but to benefit herself and those she loved.

Steve and Karen have resorted to drug addiction and gambling to alleviate the stress of their sudden wealth. The lottery not only brought wealth, but power. Neither of them ever saw themselves as powerful and had no experience as leaders. However, with $38,000,000, their friends and family have put them in the position of leadership. They long for the simple life that can only be accomplished by giving all of their money away, which may happen if they do not curb the addictive behavior.

Similarly Sharon needs to take stock of her lack of skills for leadership. She does not have to work, nor have any management responsibility in the business at all. Yet she feels a tremendous responsibility to do something with the great gift she has inherited. What Frank, Steve and Karen and Nancy have in common with Sharon is the awareness that wealth brings with it responsibility. Planning for this new responsibility will put you ahead of the game when the time arrives.

Stewardship is another name for this responsibility. Once all of the bills are paid, once the new house is purchased, once you have exhausted all of your fantasies for travel, jewelry, cars and horses, the “average millionaire” still has to ask himself or herself, “What am I contributing to my community?” This is the bump in the road that takes the most maneuvering. As long as you barely make enough money to pay the rent, or you work night and day to get your start-up business off the ground, or your days are filled with managing small children, there is precious little time to ask yourself “what will I be remembered for?” But the acquisition of wealth puts people in this spot, sometimes overnight.

Charlene took care of her basic needs after she and her husband struck it rich with their manufacturing business. She built a new house, decorated it, bought a condo at the beach, traveled to Europe, sent her children to private schools. Then one day she woke up deeply depressed because her life had no meaning. She tried therapy. She volunteered for worthy causes. She joined social clubs. She took up sculpting. Nothing worked, however, until she read about foundations. This idea took hold of Charlene and she began the process of funding a foundation that would sponsor young women interested in entrepreneurship.

If you want to be prepared for wealth start thinking now about what you really want to do with that money. Ask yourself, what is really important to me in my life? If I could change the world to make it a better place what would I do? If you can answer questions such as these, you will have principles to guide you as you acquire wealth.