Why Lottery Winners Go Broke Written by Shekinah Ade-Gold on behalf of Budget Leaf
Gambling is big business, and every day we can see scores of people who cash in on tickets hoping to find the next big break. For a lot of individuals, this money is wasted and only serves to feed their addiction to gambling. However, every once in a while there is a chance of the win being in your favour. Why, then, are there so many horror stories about such good luck?
Bad Financial Planning
Often, people win large sums of money and fail to plan for this occasion. They may know of the tips for financial wealth such as saving, investing, repaying debt and being frugal – but the high of winning a life changing sum of money leads them into the trap of being careless. The true value of their win (which is usually cut by about 20-30% based on taxes and other costs) appears greater than it really is, and they happily spend it on things they do not need, or previously had no desire for.
It’s Hard to Say No
Once the news gets out that you have received a large amount of cash, family, friends and even strangers will all be seeking you out. We live in society that tends to believe that each person is entitled to the finances of those who love and/or care for them. If you’re a person who finds it difficult to stand your ground and turn down requests for money, you will usually end up giving it all away.
Their Bills Get Higher
Lottery winners can sometimes become hungry for things that they were unable to afford before. They tend to go for bigger houses and fancier cars, forgetting that it will take more money to maintain and sustain their acquisitions. Some purchases are liabilities, and will provide no earnings or value in return. The fancier the house, car, vacation or clothing item, the more money you will spend.
They Can Become Victims of Theft
Unfortunately, we live in a world where some people will take by force things that they haven’t earned. This is why it helps to be low-key with your earnings; if not, you can set yourself up for unwanted attention and possible harm. By no means do we suggest that you become afraid of building wealth; rather, this is just a warning that greed, jealousy and anger can cause people to resent you, and this usually leads to robberies or worse.
The Money Is Spent On Drugs and Alcohol
Since dealing with newfound wealth can introduce many new stress factors, sometimes winners cope with the pressure by diving into drug use and alcohol dependency. A number of lottery winners end up reporting cases of depression, suicide/suicidal ideation, divorce, family problems, legal issues and so on. If one is unable to calmly decide how to use their cash and stick to a lifestyle that secures this wealth, the sudden turn of events can cause them to lose grip on reality and go for drastic measures.
If you play the lottery, we hope you win a great sum of money. Just remember that these winnings are smaller than they appear, and dealing with money in a financially wise way is much more important than spending just because you have the means to do so. This will preserve your money, and keep you safe from the pitfalls associated with winning and losing the lottery.