How to deal with a Windfall of Money

A middle aged gentleman received his biggest ever pay out in life that saw him get UGX 200 Million in cash. All of a sudden, he is struggling to figure out what business to invest it in. With too many ideas, his brain cells are exploding like popcorn.

His experience is no different from what you too may have gone through in the past, managing windfall money. I heard of some children who casually ate through UGX 2 Billion that their late father had left for them. They bought all the nice toys like cars, phones etc and upgraded their hangouts. Before they knew it, they were back, penniless in less than two years.

Back to the middle aged gentleman. He has this money, he’s very excited and willing to invest. He has no experience in running a serious business but believes money talks. I am sure numerous hangers on are now giving him all sorts of advice. Ideas like; building rentals, setting up a hardware shop, starting a farm, opening a restaurant, importing second hand cars and so on and so forth.

While I appreciate his desire to put this money to productive use as soon as possible, his lack of business experience is a handicap he has to carefully deal with. I recall in the 1990s when a number of top level officials were relieved of their duties by the Bank of Uganda. One of the victims was a neighbour of ours and his retirement package was in figures that sounded astronomical. He then begun dabbling in all sorts of businesses basing on ideas being fed to him by hangers on. Within three years, he was flat broke and five years later, we buried him.

My advice to this brother of the 200M jackpot is that he needs to first sober up. Doing things with a lot of excitement will make him a target in this city of Kampala that has lots of conmen who can smell money from afar.

How can he sober up? Let him get UGX 190 Million of that payout and place it in time bound Treasury Bills from Bank of Uganda for one year or even less. The purpose here is to put his money away in a place he can’t easily get access to. However, it also earns him some interest implying that he shall turn a profit through this action. I have shared extensively on this previously in another article. During the time that the money is out of reach, he can take time to soberly evaluate the various investment ideas that he either already has or those being brought before him. I am certain that by the time 12 months elapse, he shall be more prepared to take on the business world in a much better way.

Remember the UGX 10 Million that I left out? I do advise that he uses that to satisfy his cravings. Let him have all the fun he has ever wanted to have so that he “washes away the thirst.” Satisfying himself of these cravings is key to his ability to retain sanity in future as his business grows and he becomes richer.

Are you expecting a windfall one of these days? Are your parents retiring hence getting a payout? My core advice is that you do not rush to spend that money. Maintain the same lifestyle you always have had, detach yourself physically from the money and embark on the planning process. You’ll be very happy with your results eventually.

James Wire is a Small Business and Technology Consultant based in Kampala, Uganda.

Follow him @wirejames on Twitter

Email – lunghabo [at] gmail [dot] com