This article was written by Joe, a financial counselor, has been a newspaper money columnist for nearly three years. He started his blog, Personal Finance By The Book, in July, 2009.
The Tortoise and the Haire All Over Again
A few months ago I watched a TV “reality” show which featured various lottery winners and the story book lives they live. Each family had left their old jobs and was now able to pursue their passions and live a life of luxury. They had paid-for mansions, horse farms and condos. Their marriages were better than they had ever been. Winning the lottery had evidently made all of their dreams come true.
I didn’t actually watch the entire show because this misrepresentation of Lottery winners started turning my stomach. “Is this a Lotto infomercial?” I wondered. “Are these people for real?” I can think of three possible answers:
- They are actors; therefore the reality is unreal.
- They are so new at handling their riches that they have yet to experience the downside of new wealth.
- Everything on the show was true, but these people are the only ones the producers could find who actually benefited from winning the lottery. Hmmm. Maybe this is why I have never seen this program again: no more contestants.
Am I some kind of prude who looks down on those who play lotteries? Not really. But if you spend your hard earned money on lottery tickets, I have a word for you: “Wake up. Even if you win, you lose!”
Most lottery winners become bankrupt
Let me explain. A survey by “Associated Content” indicates that 90% of lottery winners become bankrupt after 10 years. Why? Because if they had trouble managing their previous incomes, they were totally out of their elements trying to manage a lot of money. Furthermore, the divorce rate of lottery winners is substantially greater than those who don’t win. Why? Because great sums of money will magnify the character traits (good or bad) that a person already has. A mere thought of immorality somehow explodes into reality with great unexpected wealth.
Other downsides of winning the lottery:
- You will hear from all manner of con-men who are trying to “help you”
- You won’t know who you can trust.
- Mere acquaintances will suddenly want to become good friends.
- You don’t know who your true friends are.
- You quit your job and miss the friendships of your former co-workers.
- You move into a mansion and miss your former friends and neighbors.
- You become bored.
- You and your spouse fight about what to do with the money.
- You will hear from relatives you didn’t know you had.
If you are a lottery player, you might be thinking, “None of these things would ever happen to me.” Right, because you don’t have a chance of winning anyway. Not really. With the odds of winning the Powerball jackpot at 1 in 146,000,000, you would need to buy a ticket every minute of every day for 278 years to just have an even chance of winning.
The lottery is a losing bet
So, win or lose, playing the Lottery is a losing bet. However, the real issue here is not the Lottery; it is the get rich quick mindset. Remember the story of the tortoise and the haire? The tortoise (slow and steady) wins every time. And you will too if you decide to start investing the money you now use to buy lottery tickets with. Only $10 a week in a good mutual fund should grow to at least $400,000 over a normal working lifetime.
“Wealth gained hastily will dwindle, but whoever gathers little by little will increase it.” – Pro 13:11
You have a choice: throw your money away at a no-win bet or invest it a little at a time and build a certain nest egg. Are you a tortoise or a haire?