This is the second in a three-part series on "If I had a million dollars" on the phenomenon of sudden wealth. Part one can be obtained by searching the Royal Gazette Moneywise Archives on www.theroyalgazette.com.

Sudden Money Brings Irrevocable Change.

Reading this you may think, "well, if I had a large sum drop into my life, I know exactly what I would do. Buy a large pleasure boat; a cruise around the world; a large, large diamond ring; a beautifully decorated waterside home."

Amazingly, the choices become very difficult because the choosing what to do brings into the forefront the very essence of that person. Who are you? What are your values? How do you handle the envy? Who should you help out now that you can afford just about anything? How do you select the truly needy from the merely greedy? How will this change your position within the community?

Never confuse real money with paper wealth.

We've all read of those Silicon Valley millionaires who borrowed heavily, built mansions, botched asset allocations, and bottomed out leveraging paper stock values that could not be sustained.

You simply cannot count your chickens before they hatch ... and what is it about finance that we continually relate to farming?

How do people face decisions on managing a large sum of money?

Statistically, they handle their finances so poorly that entire financial planning industries have developed to help individuals cope appropriately with impending wealth.

These professionals provide objectivity and impartiality.

Proven financial advice is vitally necessary, especially when personal injury settlements are awarded.

In these cases the recipient must make this settlement money last for the rest of his/her natural life.

Making the wrong decisions may mean living in abject poverty instead of a comfortable future.

About 12 years ago, I met the son and was struck by how shy, almost na?ve he acted. He had won $500,000 net (after Uncle Sam had taken his tax cut). I opened his file fully expecting a nice healthy balance in his investment portfolio and was shocked to see only a little over $125,000 left ? after only three years.

Drifter without a cause ? the son.

The son had been a nonperformer throughout his high school years; the intelligence was there, just no interest in learning.

So he went to work in his father's plumbing business, only to realise very early on that there was barely enough income to support Dad and Mom, nowhere enough for his family, too, with a recent marriage now including a lady teacher with Master's degree.

Father and Son ? Two Plumbers Part Ways:

He truly tried, struggling with the discipline of self-employment, the constant hustle to find jobs, to perform on the job, then collect from the customer for the job.

A sense of disillusionment set in, exacerbated by his father stating frequently that he intended to stand down and put his feet up. Retire, that is, with the family business funding Dad & Mom's pensions.

Dad never paid in enough to qualify for Social Security.

Megabucks and Needy Relatives.

Two years into the plumbing career, he hits the Megabucks. He and his wife move to an upwardly mobile neighbourhood. Dad, Mom and brother disapproves, but he feels he deserves a tangible success symbol (after all he is a lottery winner).

He does not pay cash for the house, instead opting for a small down payment and a big mortgage. Under relentless family pressure, he also buys Dad's business interest out.

Dad and Mom sell everything and head west to a desolate Missouri town (family relatives are there). They didn't like it and are back within a year.

Naturally, Dad and Mom borrow from him again to purchase a small house back in the home state. It is the least he can do, they say.

My Values Have Changed.

He reaches a milestone; he cannot follow in his father's footsteps. The business slides into an abyss as he, envying his wife's academic achievement, is now motivated to become an educational success. As a full-time university student, they are financing their lifestyle with her meagre teacher salary and the remaining winnings.

What Goes Around Comes Around.

Almost literally, back to where he was four years before he is now in desperate need of financial advice.

Facing extreme financial difficulties now with a family on the way, they have decided to sell their magnificent new home.

Unfortunately, the real estate market is depressed; the sales price may not even cover the mortgage. Can they even hold on to $125,000?

What would have happened if he had been cautious, investing most of winnings for the future, then carefully subsidising the entire family's lifestyle? See the projected earnings that could have been through the great bull run of the 1990's, close to a million dollars, even after spending $100,000!

What's the Lesson Here?

Rule Number 1 ? Park the money in an interest bearing account.

Rule Number 2 ? Be willing to pay for objective competent advice from professionals experienced in financial problem solving. Seek at least two opinions.

Rule Number 3 ? Do not give in to demands of family until you fully explore rule 2.

Next week: Last Case How much do I need to take care of me for the rest of my life?

Martha Harris Myron CPA CFP? is a Bermudian, a Certified Financial Planner (US licence) practitioner and VP, Personal Financial Services at Bank of Bermuda. She holds a NASD Series 7 license, and formerly owned a US financial services practice meeting the needs of 400 individual and corporate clients.

Confidential E-mail can be directed to marthamyronnorthrock.bm

The article expresses the opinion of the author alone, and not necessarily that of Bank of Bermuda. Under no circumstances is this advice to be taken as a recommendation to buy or sell investment products or as a promotion for financial plans. The Editor of the Royal Gazette has final right of approval over headlines, content, and length/brevity of article.