Eight Tips For The Suddenly Wealthy
Black Enterprise Magazine September/October 2018 Issue

John Wall, the No.1 NBA draft pick, signed a five-year, $25 million deal with Reebok. (Source: Washington Wizards)

John Wall, 19, the No. 1 NBA draft pick this year, and the newest player for the Washington Wizards, used to live in a small apartment with his mother. Now, the teenager is earning a $4 million annual salary, has a five-year, $25 million endorsement deal with Reebok, and plans to buy his mother a house.

Whether you’re on the verge of earning millions like Wall, a Goldman Sachs employee thinking about next years six figure bonus, or more commonly, someone who lost a loved one and gained an inheritance, managing a large sum of money, out of the blue, can be both exhilarating and daunting.

“Whether it is $300,000 or $30 million if you don’t take ownership and accountability in what your future holds and you rely on someone else to do it–your friends, neighbors, or relatives even, who are not educated in the financial world–you’ll lose it all,” says Steve Piascik, CPA, president of Piascik & Associates, who specializes in tax planning for athletes.

Of course, there is nothing wrong with spending your new found wealth, but few people consider what they need to do to maintain their windfall over their lifetime before they spend it all up. Whether you have hit the lottery, inherited a fortune, or sued Bill Gates and won, here are eight tips you can use to make that money last.

Open an interest bearing checking or savings account. Every day you spend without cashing large checks you could be losing hundreds of dollars in interest.

Take a time out. The Sudden Money Institute says you should not spend any money until you clear your head, assess your financial situation, and commit to a financial plan that works for you. Decide what your immediate needs are, and pay off your creditors, especially those with interest rates higher than 10% to 15%.

Invest in Financial planning services: Don’t rely on friends or family to manage your money. Hire certified professionals to help you draft a will, purchase life insurance, or contribute to a retirement plan, says Piascik, who is a member of the NFL Players Association‘s Registered Financial Advisor program.

Contribute to an IRA, Roth IRA or retirement plan. By the time they have been retired for two years, 78% of former NFL players have gone bankrupt or are under financial stress because of joblessness or divorce, according to RAM Financial Group. Decide to monthly allocate a percentage of your windfall to a retirement plan.

Review the state of residency. Consider purchasing a home in a tax-advantaged state, like Florida or Texas, where you can save up to five percent or more in taxes, recommends Piascik.

Keep receipts from your spending. Save money on taxes by deducting charitable giving and on-the-road expenses, such as meals, hotels, laundry, and wireless minutes, says Piascik.

Beware of mortgage interest limitations. You will lose tax-deductible interest paid to home mortgages and equity lines that exceed $1,100,000. Work with a tax advisor to structure loans to maximize tax deductions.

Review allocation of state reported income. Athletes aren’t the only ones who have to report income made in several other states besides their state of residency. Have an experienced tax advisor review W-2s to ensure that you don’t pay more than you should.

For more information on how to manage money when you move up the tax bracket visit:

What to do When You Get a Big Windfall

Accounting for Pro Athletes

Join the Conversation

Marcia Wade Talbert

Marcia is a multimedia content producer focusing on technology at Black Enterprise Magazine. In this capacity she writes and assigns stories to educate readers about social media; digital integration; gadgets, apps, and software for business and professional development; minority tech startups; and careers in STEM (Science, Technology, Engineering, and Mathematics). In 2012, she received two Salute to Excellence Awards from the National Association of Black Journalists and was recognized by Blacks in Technology (BiT) as one of the Top 10 Black achievers in the tech arena for 2011 at SXSW in Austin, Texas. She has spoken about technology on panels for New York Social Media Week, at The 2012 Rainbow/PUSH Wall Street Summit, as well as at Black Enterprise’s Entrepreneurs Conference and Women of Power Summit. In 2011, SocialWayne.com chose her as one of 28 People of Color Impacting the Social Web, and through crowdsourcing she was listed as one of BlackWeb2.0's/HP's 50 Most Notable African American Tastemakers in Social Media and Technology for 2010. Since taking on the role of Tech editor in September 2010, she has conceived and produced five cover stories on Technology and/or STEM and countless articles, videos, and slideshows online. Before joining BlackEnterprise.com as an interactive general assignment reporter in 2008, she freelanced with Black Enterprise beginning in 2003 while working as the technical editor at Prepared Foods magazine. There she further honed her writing skills and became an authority on food ingredients, including ingredients used in food fortification and enrichment. Meanwhile, her freelancing with Black Enterprise and BlackEnterprise.com helped her stay current on issues pertaining to the financial and business welfare of African Americans. As a general reporter for Black Enterprise she attended and reported on the Democratic and Republican National Conventions, where she interviewed Valerie Jarrett, senior advisor and assistant to President Barack Obama and U.S. Attorney General Eric Holder. Marcia has a Bachelor of Science degree in Agriculture with an emphasis in food science from the University of Minnesota, and a Master of Science degree in journalism from Roosevelt University in Chicago. En route to her secondary degree, she served as the editor-in-chief of the Roosevelt University Torch, a weekly, student-run newspaper. An avid photographer and videographer, Marcia is one of several employees at BLACK ENTERPRISE who interned for the publishing company as a college student. She lives in New Jersey with her husband, a food scientist; her seventeen-month-old daughter; and “The Cat”, but still considers Chicago home.

MORE ON BlackEnterprise.com