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I did it as well.
I began to dream.
What if I won the Powerball jackpot, which now exceeds $1 billion? Supersize lottery prizes often spark a frenzy, leading people to dream about their “Take this job and shove it” moment.
The lure of microwave wealth might have you thinking about grand living, be it aboard a private jet or relaxing poolside at a beachfront villa.
Or, understandably, your dream might be an escape from worry, whether it’s inflation and the rising cost of housing, groceries, and cars. A big windfall could mean eliminating credit card debt or the ability to help struggling friends and family members.
Ten years ago, the New York Lottery ran an ad campaign with this tagline: “You’d make a way better rich person.”
It was intended to mock the frivolity of the ultra-wealthy.
One commercial showed a smug guy soaking in a tub filled with expensive wine as a butler poured the pinot noir. Another shows a man purchasing solid gold staples. “Sometimes regular staples, they just don’t capture the richness of what you’re stapling,” he explains.
The point being that you’d be much better about spending the money, right?
Yeah, probably not.
Here’s what usually occurs when people get a big infusion of money.
1. There’s always a price to pay
Know that nothing comes free — even winning the lottery. Consider those free subscription offers. You might think why not, “it’s free.”
But before you know it, it’s three years later, and you forgot you’d signed up for automatic renewal. Because even legit companies can hook you into a subscription that becomes nearly impossible to cancel.
Then there are the not-so-legit offers. Many scams have hidden behind the promise of “free stuff.”
Or maybe you inherit a home without a mortgage, only to discover the house is a money pit.
It doesn’t take much for a windfall to become a significant financial burden.
Don’t expect sudden wealth to make all your problems disappear. It never will.
2. Fast money can bring out the worst in people
In some states, by law, lottery winners must be identified. This can make them targets for criminals and lead to a flood of requests for money from family, friends and even strangers.
In November 2015, Craigory Burch Jr. won $434,272 in a Georgia lottery. A few months later, the forklift driver was killed at his home after seven people burst through his front door. Relatives suspect he was targeted because of his lottery win.
Michael Todd Hill of North Carolina won more than $4 million after taxes in a 2017 lottery scratch-off game. Nearly five years later, the 54-year-old married man was sentenced to life in prison without parole for killing his 23-year-old girlfriend.
A California woman won $1.3 million in a lottery pool with her co-workers. A month later, she filed for divorce from her husband of 25 years but did not disclose her winnings during divorce proceedings. Her ex discovered the payout and sued, and the court ordered her to turn over her share to him for intentionally hiding it.
3. Wealth without good money management skills can leave you broke
It happens to movie stars, athletes, music icons, and everyday people.
They receive big paychecks, and the shopping sprees result in bankruptcy.
William “Bud” Post III won $16.2 million in 1988 but ultimately died broke. When he purchased the Pennsylvania Lottery ticket, his bank account had just $2.46, according to his obituary. But within three months of collecting the first of 26 annual payments of nearly $500,000, he was in debt; he’d purchased a plane, a restaurant, and a used-car business.
“Everybody dreams of winning money, but nobody realizes the nightmares that come out of the woodwork, or the problems,” he said five years after his win.
Yes, some lottery winners spectacularly squander their winnings, but those who seek good financial advice and manage their money wisely can keep their wealth.
4. Chasing easy money can become addictive
Spending a few dollars on the occasional lottery ticket isn’t going to hurt anyone who is saving for retirement or building a solid emergency fund. However, I’m concerned about the many others who fall into gambling addiction.
Through sports betting and state lotteries, too many people become compulsive gamblers, which can result in major financial problems, including job losses and bankruptcy.
5. Sure, dream big. But wealth is more likely to come from boring investments.
The millionaire next door or someone working in the cubicle beside you, probably didn’t invest all their money in a tech company that made them wealthy. They didn’t gamble on cryptocurrency.
Many 401(k) millionaires are civil service workers, teachers, military members (or retired military), managers or co-workers who clock in just like you, then leave at the end of their shift to pick up their kids from school. Many of them never earned six-figure salaries.
These millionaires built their wealth over decades. They took advantage of matching retirement plan contributions from their employers. They also didn’t cash out their retirement savings when changing jobs. And, most importantly, they didn’t let a pandemic, a change in presidency or economic issues scare them away from the stock market.
This steady approach, while boring, is what turns regular paychecks into real, lasting wealth over time.
Although it may be fun to romanticize about instant riches, it can be a costly distraction, diverting attention from a solid plan to achieve financial security.
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