Winning A Lottery Is The Beginning Of Your Problems…….??

Studies have shown that the vast majority of people who win large lottery prizes end up broke or nearly so within a few years of receiving their millions. Why? Could it be that the same reason most ordinary working people fail to achieve financial independence is the same reason so many lottery winners end up broke after becoming instant millionaires?

Okay, let’s assume that Johnny, an ordinary guy, had struck a winning ticket of $1 million. The money will certainly drive him up to the moon and back several times. He thinks that now, all his problems will go away.

What is most likely to happen is that Johnny would buy himself a brand new BMW or an SUV as a reward. Fair enough. And then renovate his house to make it more spacious and comfortable. And of course, Johnny will be paying all these in cold hard cash. That will certainly win him some respect from the shocked salesman and contractor. Then, he will take some of the money and settle all his debts. And of course, he will throw a party to celebrate his good fortune. Okay, that’s good.

By now, with the new BMW or SUV and with house renovation, Johnny will be left with half a million dollars. He would probably be thinking about investing some of the money. But remember, he is not exactly well versed with investments, so he relies on the salesman that comes calling. And boy, they do come. Car dealers, property agents, unit trust consultants, insurance agents, and financial advisers, are all coming to him like angels from heaven. In the end, he chooses one or two, not because they are good investments but because the salesmen are so warm and friendly.

By now, most probably, Johnny would have spent practically all the money he had won. But remember, it doesn’t end here. Life goes on, which means that they will be bills to pay, loans to settle, and things he wants to buy. But he had run out of money already. So, he goes back to living just the way he did before he won the lottery. He buys things on hire purchase, buys things that he doesn’t really need, and buys things to impress people he doesn’t even know.

Soon, he will discover that for some reason and contrary to his expectations, his investments are not exactly making money. Bam! He discovered the sad truth — making money has nothing to do with a warm and friendly salesman.

All that money he had won, did not solve anything after all. His problems didn't go away. All that happened was that they went for a short vacation but were now back with a vengeance! They want to be paid in full, right here, right now. In other words, Johnny is back to square one. Ground zero.

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But sadly, the above story is not just a story and is not fiction. This exact situation has been repeating itself, time and time again, all over the world. Those who came into sudden wealth, be it from winning the lottery, inheritance, or lucky business deals, pretty soon found themselves in the same situation after about five years. Even after getting one, two, three or even five million, they soon found themselves broke after a few years. Some were even worse off, they owed money to others!

In a study done on one thousand lottery winners in the United States, after about five years, all but fifty had lost the money they had won. They were back in the same situation that they were in before striking the lottery. And some were even worse off and actually owed money to others. Interestingly, the study also discovered that the fifty or five percent that remained millionaires would have been millionaires anyway even if they did not strike the lottery! They had good money habits, they know what to do with the money.

What do you think would happen if you took a professional truck driver who had never flown in an airplane and suddenly put him in the cockpit of the simplest single engine and said, “Can you fly this from New York to Los Angeles? Not only would the truck driver not be able to fly across the country, but he or she might not even know how to start the engine. The professional truck driver would probably be baffled by the simplest of airplanes.

Winning the lottery is much like putting a truck driver in the cockpit of an airplane. Without knowing how to handle money, a lottery winner stands a better than average chance of crashing and burning financially. Just as the lottery winner may lose the newfound wealth, the ordinary working person will never attain wealth without first acquiring an increase in knowledge on how to manage money.

Although there is no comparable study done, I believe that the same story above would be repeated anywhere in the world. About five percent, give or take a point or two, of the population will be rich and wealthy, while the rest will be getting by, poor or dead poor. Our habits, knowledge, and willingness to take action are the deciding factors, not striking the lottery.

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That’s all for now my friends. See you in my next article.