Why Do Lottery Winners Lose Their Wealth?
What are the dangers of sudden wealth? Proverbs 13.11 says that wealth gained hastily will dwindle. Proverbs 20.21 similarly warns, “An inheritance claimed too soon will not be blessed at the end.”
There is danger in sudden wealth. Teresa Dixon Murray wrote a January 2016 article for The Plain Dealer with this simple headline: Why Do 70% of Lottery Winners End Up Bankrupt?
Murray cites Steve Lewit, Financial Wealth Group of Chicago:
People who were little, ordinary people all of a sudden become extraordinary. They’re euphoric. They lose all sense of reality. They think they’re invincible and powerful. They think they’re Superman.
Giving away too much money to family and friends is often one of the chief causes of squandered wealth. Put differently, the problem of sudden wealth is that those who receive are not prepared to handle it.
For the first time these people have options. They have options on lifestyle, housing, cars, food, travel, etc. Piled on top of those options are people—friends and family—who bring them more options and rely upon emotion rather than logic to extract financial gain.
When confronted with these options for the first time, most people with sudden wealth don’t have a filter for these choices.
Murray writes that the key is to be surrounded with a team of advisors who can provide objective advice and grounding on investments, requests, and lifestyle.
Indeed, whether it’s the lottery or inheritance, sudden wealth can be a burden. But with preparation and wise counselors, the pitfalls can be avoided.