From Wealth to Poverty: How Lottery Winners Lose Everything in Less Than 5 Years
Since I was a child I wondered how it is possible that those who win millions of euros in the lottery become poor in 5 to 10 years. It seemed almost impossible to me that holding such a large sum of money you wouldn’t be able to multiply it or at least be able to support yourself all your life plus the next generation after you.
Unfortunately now after a few good years of financial education I understand the difference between a man who becomes rich because of his knowledge and those who become rich by luck. The difference between the two is the way they look at money. Those who are financially educated even if they don’t have large amounts of money at first learn how to invest their money so that it works for them.
There was a saying I heard years ago that if you can’t manage $100, you won’t be able to manage $1000 and you certainly won’t be able to manage a million dollars.
While those who are financially educated invest their money in acquiring knowledge and assets to increase their wealth, those who were poor and become rich overnight choose to buy liabilities. So they end up buying houses and cars they can’t afford just to attract attention by spending a lot of money.
Because they see that their wealth is running out and all they have accomplished is spending money they decide to start a business. Unfortunately because experience comes with time and you can’t be an entrepreneur overnight they choose to associate with the wrong people and thus lose much of the money they have earned.
That’s when all the wealth starts pulling them back because the big houses they bought and the cars eat up money and when the bag runs out the problems start. So they end up in a few years even lower than where they were and that’s only because they failed to educate themselves financially.
That’s why it’s important that no matter how young or old you are, you put financial education first. To learn as early as possible to save money, invest it in assets that will make you money and only then enjoy liabilities like houses and cars.
