Why Do Lottery Winners Go Broke?
We have all heard stories of lottery winners who win insane amounts of money only to be left destitute a few years later. This is an occurrence that happens so often that it has aptly been named “the lottery curse” and is something that all new winners are warned about. However, this so-called curse is usually little more than the bad financial habits of winners and can easily be avoided. In this article, we will look at answering the question of why do lottery winners go broke?
They Try and Go It Alone or Only With Their Friends or Family
As you have probably read on every website that offers advice to new lottery winners—it is always best to get professional help when claiming and managing your lottery winnings. This professional help is qualified to assist you in knowing how and when to spend your money and can lead to you enjoying the benefits of your money for many years to come.
However, when trying to manage your winnings yourself, allowing your friends and family to help you, or even using a professional recommended by your friends and family, things may quickly spiral out of control—as is the case of Gloria Mackenzie. She quickly learnt the importance of hiring a proper professional that does not have ties to anybody in her personal life—such as her son. Unfortunately, by the time she learnt this lesson, it was already too late.
They Just Keep on Giving
Believe it or not, it is possible to be too generous. Many of us already know in our hearts and minds who we would share our winnings with or what causes we would give to should we ever hit the jackpot. It is a natural part of coming into a windfall that makes us want to share the good fortune with others and share the love—especially if we have family that has always had to hustle to survive. However, a wise move to make is to limit just how generous you are.
One lottery winner who quickly discovered this is Billie Bob Harrell Jr., who won and subsequently lost $31 million. Soon after his win, Billie started giving money to every person or cause who approached him. As you may expect, the number of requests soon outweighed the amount of money available, and he was left flat broke while everybody else enjoyed his winnings.
They Spend Recklessly
As what is easily the most common reason for lottery winnings going broke, spending recklessly seems to be a widespread practice for most winners. Many have the belief that such a large amount of money cannot easily be spent. Maybe it is because they know just how big a lottery win is. However, a massive win can be quickly dwindled by reckless spending—regardless of how large it may seem at the time.
A true example of this is Michael Carroll, who immediately started burning through his lottery winnings on jewels, alcohol, cars, parties, and mansions. Less than a year after his win, his reckless spending had forced him to begin living off of the tiny amount of his winnings that he had actually bothered to invest (thanks to the advice of financial planners). However, even this did not last, and he was soon back at work with nothing to his name.
They Immediately Call It Quits
Another major cause of lottery winners going broke is the fact that they tend to quit their jobs as soon as they receive their winnings—or even sometimes as soon as they realise they have won. While this may make some sense considering they no longer need the money, having a job is an excellent way to stay grounded and to keep your wits about you.
One winner who can testify to the way that losing your daily grind can affect you is Jack Whittaker. Jack, who famously claimed that it would have been better for him to simply tear up his ticket and continue with his life as a successful businessman, lost more than just his fortune. Due to his winnings, jack lost his granddaughter to drugs, was robbed blind outside a strip club, and even lost his home in a tragic fire.
The four scenarios for why lottery winners go broke paint a bleak picture for the financial habits of lottery winners. In fact, most of us could agree that the only habits that the majority of lottery winners have are bad habits. Luckily, these habits can easily be avoided and winning the lottery does not necessarily have to be a bad thing.
One of the most important things to do is to follow the advice of a professional financial advisor, keep grounded by continuing your daily life (yes, that includes your job), and continue to live as close to the way that you were before your win was possible. This may be harder considering the better cars and homes that you will likely have, but it may be the only way to ensure that you don’t break the bank in the wrong way.