We’ve all sat around with our friends over drinks or dinner and chatted about how amazing it would be if we were to win the lottery of 5, 10 or 15 million dollars. We’ve all thought in detail what we would do with the money, should we win and what fun we would have with our winnings.
The real challenge however, comes when in your heart and soul you are hoping, wishing and praying to win the lottery in order to be able to resolve your financial challenges. This is when we are looking in the wrong direction.
Here are the four reasons why winning the lottery is not something you should hope for:
- Your financial habits aren’t going to If you are someone who is careless and disorganized with your finances, don’t keep receipts, haven’t filed your taxes in a while and suddenly find yourself with several million dollars, your old habits will persist. Similarly, if you are super frugal and think that you will suddenly start spending lavishly, it’s not going to happen. If you are that person who lives paycheck to paycheck, without saving anything, you are most likely to land up spending that money very quickly. You might think “things will be different after a windfall”, but it has been shown that even with a lottery win, habits don’t change.
- Everybody you know is going to ask you for money. Your phone is going to be ringing off the hook. Your long lost cousins are going to call you; friends you forgot you had from your past will suddenly reconnect and don’t forget all the local charities will start pestering you. Financial planners have said that the biggest demise of people who win the lottery is actually that they give too much of their money away, feeling like there is an endless supply, without realizing how quickly that money disappears.
- Expensive things are in fact expensive to maintain. If you decide to purchase a large new home, even for just a few million dollars, well there’s going to be huge costs associated with that purchase. You may not take into consideration things like property tax, insurance, maintenance fees and likely you’re going to have somebody clean the house and maintain the landscaping. If you decide to purchase an upscale boat, consider the costs of the parties you will want to throw, the food and gas and cleanup costs. Very quickly you’ll find that money will dissipate as there are so many hidden costs associated with high price items.
- Winning the lottery is a temporary solution if you haven’t learned how to generate income. Having received a massive windfall of money is going to be quickly spent if you have not acquired the skills to deal with money. Having the know-how to invest and have money grow is vital to holding on to your winnings.
Once again you will be thinking, “no this won’t be happening to me, I’ll be fine and the money will last me a lifetime!” Read on…
The National Endowment for Financial Education did a study that showed that 70% of people who come into a significant amount of money end up being broke!
The Bank of Montreal actually conducted a study questioning Canadians as to what their plans for retirement were and how are they were going to fund their retirement. A full 34% of respondents said that they were planning to win the lottery!
This is really, really sad, knowing that this is hardly a way to plan for the future. We cannot afford to live in a dream-world.
Winning the lottery is not a financial answer. In fact I think it is unfortunate when people are in a bind in that their finances are in such a bad way that they are looking for miracles…hoping and wishing that money would fall out of the sky (winning the lottery) in order to be able to solve their financial woes.
Here is my challenge to you if you find yourself dreaming of a lottery windfall to solve your financial problems, instead of hoping for miracles, start taking some small steps to generate a little more income. This could be in asking for a raise at your current job, taking on another part-time job and starting to generate multiple streams of income. Take that money that you would be spending on buying lottery tickets and put it in savings and eventually you can start investing…you’ll be amazed how quickly it starts to add up.