A large percentage of the men and women who win the lottery come to the end of their earnings with very little to show for it. It can also happen with an inheritance.
The same is true with sports or acting-related contracts. Many men and women who command six-figure -if not seven- contracts end their careers with very little. It isn’t always the case, but it is frequently the case.
The odds are against the lottery winner developing a wealth mindset.
The “lottery effect” can be avoided but it’s difficult to listen to reason when you seem to have all the resources you will ever need.
The truth is life expands and contracts to balance within your means. If you have an abundance of money or resources, your habits and expectations will expand with that abundance. Often, people become more responsible and more focused when they have very little.
Here are four tips to avoid the “lottery effect”.
Find a Mentor
Find someone – whether a knowledgeable friend or a paid financial planner – to offer mentorship about how to grow and manage your wealth. You may not get a large sum of money handed to you, but you can manage your incremental wealth and see huge returns over time.
Save and Invest Some
There will come a time when savings will matter. It might seem far away particularly if you are young and healthy, but even young and healthy people have unexpected things happen.
It might be hard to save when you believe that you won’t have anything happen that you can’t handle, but the first time you need savings and it is there, you will instantly know the value of setting money aside. My good old emergency fund has bailed me out a few times. I’ve yet to meet anyone who wished they didn’t have some funds set aside when sh*t hit the fans.
Give Some Away
Generosity is the key to creating more. Giving some of your resources away for the benefit of others is good for your karma, the kingdom, or your community – whichever you subscribe to.
Spend Some
The whole purpose of having a resource is to use it. No one is denying that goods and services make life easier and more fun. No one says that you have to live like a pauper either. Using a budget to allocate your income for necessary and discretionary items will help you manage your money.
Final Word
Getting a windfall and blowing through it is common if you don’t have support and direction. Set yourself up for success and avoid the lottery affect by being diligent with your money. Spend some, save some, give some away, and find someone who has experience to help show you how.
The Money Savvy Blog 