Most people think that winning a lottery could change their lives forever. Everybody wants to be rich, and winning a lottery seems like the easiest way to achieve that.
Did you know a considerable number of winners got broke within the first few years? Though it is difficult to find the exact figures, different survey reports claim shocking numbers. According to one survey, 1 out of 3 lottery winners goes bankrupt at some point in time.
“A fool and his money are soon parted.”
– Old Proverb
The news of winning mega millions might appear as a guarantee to a life of luxury. However, sadly, it is not true. Some of the famous lottery winners who went bankrupt are Callie Rogers, William Post, Amanda Clayton, James Whittaker, etc. They all have various reasons for losing it all, but few of them remain common.
- The winner’s euphoria: Majority of people who buy lottery ticket belong to lower-income or middle-income group. They have never even imagined owning such an exorbitant amount of money. So, when they win a lottery, they are on cloud nine. They lose all sense of reality and mostly by the time the reality knocks they have lost it all.
- Buying things, they don’t need: The most common thing people do once they get the money is to spend on things they don’t even need. Lottery winners often spend on luxury houses, cars, fancy gadgets, etc. While the individual purchases may not put a dent on the overall amount, but these things require regular maintenance, and the money is not going to stay forever. Moreover, it starts with an innocent extravagance and quickly turns into an addiction.
- Generous and unmindful charities: After winning a lottery, not just your life, but the attitude of people around you also change. It is obvious that the winner would love to share their fortune with friends and family, but they often go overboard. Also, in some situations, your close friends may even try to manipulate and guilt-trip you to spend more on them.
- Not hiring a financial advisor: Very few lottery winners seek professional help for managing their money. They often end up making silly financial decisions and end up regretting them. A financial advisor can help them to make sound investment decisions which winners often ignore.
- Change in mental accounting behavior: No matter how significant your lottery amount is, you can never compare it with the value of hard money. Even though both the money has the same intrinsic value, still the lottery winners treat them differently. They are often found to be more frivolous with lottery wins and perceive them as free money.
- Not understanding Tax obligations: In most countries, the lottery money is treated like any other income source. So, people are expected to pay taxes as high as 40-50%. Even if they gift their money to a friend or close relatives, they will have to pay a Gift Tax once it crosses a certain benchmark.
- Getting addicted to alcohol or drugs: Money can’t buy happiness. Once the euphoria of the win subsides few of the winners get stressed or depressed. They often resort to alcohol or drugs to find amusement in life and soon gets addicted. They are also a few winners who committed suicide within a few years of winning the lottery.
Well, our intention with this article was not to scare people about winning the lottery. Most of the people who win the lottery lead a better life. We just intend to alert you about some of the side-effects of winning a lottery and how you can keep them at bay and utilize this life-changing amount for better use.