We have seen “Lotto Fever”. Millions of Americans plunking down their hard-earned money for over 1.5 Billion Dollars, or a share of that, before taxes. And, we do that in the hopes of solving our money problems, and being “set for life”!!! Did you buy some tickets? I did. But, did I think I would win, of course not. I bought a few tickets so I could dream big for a few hours or days, for some entertainment.
So, in the latest Powerball Lottery, there were 3 winning tickets sold. Three people now figure that they and their families will be “set for life”. Or will they?
So what happens when people win the lottery?
According to US News, “Previous research suggests many people quickly spend any unexpected windfalls. A 2001 paper (by economists Guido Imbens and Bruce Sacerdote and statistician Donald Rubin) found that lottery winners saved just 16 cents of every dollar won.
Other studies found that instead of getting people out of financial trouble, winning the lottery got people into more trouble, since bankruptcy rates soared for lottery winners three to five years after winning.”
I help people solve their money problems every day. Sometimes, when I see people, they might think that the only way other than bankruptcy to solve their problems would be to win the lottery.
Why do lottery winners end up broke so often? Lottery winners are often tempted to buy luxury goods and homes. In the run up to the latest lottery drawing, financial experts recommended that, before even going public with your winning ticket, to find the best possible attorney, accountant, and financial expert to help guide you.
Back to everyday life for all of us who didn’t win the Powerball, what does this all mean? The lesson for everyone is that it doesn’t matter how much money you have, you have to be careful with your big purchases, and plan for the future. It means that we all need to resist buying things, especially big-ticket things, on impulse, and to plan for the future. If you live paycheck to paycheck, like most Americans, you don’t have much leeway for big money mistakes.
If you do have problems paying your bills, bankruptcy, Chapter 7 or 13, is available. We definitely can’t count on winning the lottery to bail us out. And, if we do get that lottery win, or some other kind of windfall, like an inheritance, we need to act carefully to avoid getting into more financial problems.
Daniel J. Winter
Offices in Chicago, Gurnee, Oak Lawn, and Skokie, Illinois