Thursday, 14 January 2016
The fact that many lotto winners end up broke is no myth.Researchers analysed 35,000 lotto winners in Florida's Fantasy 5 lottery from 1993 to 2002, and found 1,900 winners went bankrupt within five years. Sharon Tirabassi won $US10 million in lotto. Nine years later she was working part time and catching the bus to work so she could make rent payments.The researchers surmised that financial literacy was an issue, as was their attitude more reckless to winnings than it may have been to earnings.The decision to remain in your job after a windfall may actually contribute to you staying happy. But that aside, the biggest downside to a large windfall is stress. Demands and advice from family and friends, fear of losing the money again and a flood of people asking for money.
In 2012 Trevor Cooper from Te Kauwhata, went public about his huge win but went into hiding not long after when people started begging him for money. The checkout operator at the Huntly Countdown had vowed to keep working but he left his job, saying he was overwhelmed by the media's interest in his $26.5 million windfall.The psychological pressures are enormous. Even TradeMe founder Sam Morgan told media that trying to maintain equilibrium is very hard, no matter how much you tell yourself that the money won’t change you.
Four practical steps you may want to consider in the event you come into some money:•Get financially smart now. Don’t wait on the off chance you come into a serious amount of cash to get yourself out of trouble. If you can get yourself financially sorted now and can effectively manage what money you do have now, you’ll be much better for it in future.
•Take a break. Give yourself some time to pause, take stock, think… get used to the thought of having all that ‘extra’ money. Do nothing for as long as possible, to avoid acting on impulse. Some people who have previously received big windfalls suggest not doing anything lavish for at least the first six months – it will give you breathin room to take advice and make some considered decisions about what you want to do.
•Consider remaining employed: A 2013 US study found that most Americans, 51 per cent, say they will remain employed in the event of a sudden windfall, because they would become bored or because work gives them a sense of purpose and accomplishment. According to the author of ‘Why We Work’ Barry Schwartz, earning an income is the least important reason for getting out of bed every morning. Hence, any windfall we may have is not going to quench our essential need to work. Besides giving you breathing space to pursue the career of your dreams, work is integral to our self esteem and sense of purpose.•Tell as few people as you can. The more you tell, the more chance you’ll have people come knocking and asking. Remember Trevor Cooper went into hiding soon after going public with his big lotto win – the same advice applies whether you won, inherited or earned the money from the sale of a farm or business. Author and playwright Michael Bassey Johnson said it best when he said: “Pretend to be poor in reality and you'll notice a decrease in your friends list”.• Get yourself a team of expert, professional advisers (e.g. a financial adviser, lawyer, accountant and tax expert). People who are properly registered and bound by a code of ethics will be able to give you advice and assist you in making the right decisions. Remember that money does not make happiness or misery, it’s what you do with it that counts.Sources: Careerbuilder.com – Half of U.S. Workers Would Keep Working if They Won the Lottery, stuff.co.nz – Who wants to be a millionaire?, wiseoldsayings.com – Fake Friends Sayings and Quotes.Disclosure Statement: Tobias Taylor has a disclosure document that is available on request and is free of charge. The information in this article is of a general nature only and is no substitute for personalised advice. To the extent that any of the above content constitutes financial advice, it is class advice only. If you would like advice that takes into account your particular financial situation or goals, please contact your Financial Adviser.
The content on this website is for information only. The information is of a general nature and does not constitute financial advice or other professional advice. Before taking any action, you should always seek financial advice or other professional advice relevant to your personal circumstances. While care has been taken to supply information on this website that is accurate, no entity or person gives any warranty of reliability or accuracy, or accepts any responsibility arising in any way including from any error or omission. A disclosure statement is available from your adviser on request and free of charge.
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