Why do 70% of Lotto winners go bankrupt?
[Image credit: Max Pixel]
Did you know a staggering 70% of Lotto winners go bankrupt? It's true! Usually it happens within 5 years regardless of whether they've won hundreds of thousands of dollars or millions of dollars. Bankruptcy will face 70% of them. There are many people debating why. Some say Lotto winners are taken advantage of by people who fleece them of everything. Some say it's due to financial illiteracy. While it's true that some winners develop serious gambling/shopping habits it's hard not to feel like it's a bit extreme that they don't even have enough left over to keep the lights on. Personally, I think it comes down to the definition of 'wealth'. Here is mine:
"Wealth isn't defined by numbers. Wealth is defined by purpose."
If you've been keeping updated with our Facebook page, you know we regularly post interesting, financially-based articles including show-casing how different people choose to live their lives. Some people are seriously frugal - perfectly happy to go years without things like eating out and holidays in order to save every dollar for other things they value more. Others find this level of restriction, well, restrictive. They couldn't imagine going so long without eating out or at least a weekend away here and there. The difference in happiness isn't how much money each of these types of families have (they might have exactly the same income!) it's how closely the use of their income aligns with what they believe their purpose is. Their vision for their future. Example 1: If your vision for the future involves lots of missionary work, then you will be wealthy if you can financially afford to take a few years off to do it. Example 2: If your vision for the future involves sending your child(ren) to the best schools and universities money can buy, then you will be wealthy if you can financially afford to do just that. Example 3: If your vision for the future involves setting up a financial legacy for your child(ren) and having them continue to grow it, then you will be wealthy if you can build up a fund like this. Unless you have a vision for your future (even if it's still a bit blurry), you won't be able to achieve wealth. You need to have the vision first. You won't magically discover your purpose after you come into money, as our Lotto winners have demonstrated. Simply aiming to earn more and more won't help you to achieve true wealth. Only by knowing where you're headed will you know when you've achieved it.
Have a wonderful week,
The Income Organisers