How likely is it for a lottery winner to go broke
After winning the alluring lottery lump sum, how much of a possibility is it, that all your winnings shall be drained?
Winning a lottery is a fantasy for people across generations. How likely is it though?
According to an article published on BBC, research shows that the odds of winning a lottery are so small, especially in the US, that only 1 in around 300 million people in lucky ENOUGH. The chances of getting struck by lightning are almost four hundred times higher than actually winning a lottery.
Does this stop you from spending millions on buying lottery tickets? It doesn’t. And after this almost unrepeatable, exotic lottery winning, how many people manage to blow up the entire lump sum and go broke? The statistics are not very promising.
Lottery winnings trigger mindless spending
An idealistic mind, claiming to be rational shall answer this question with optimism. A conventional idea behind lottery winning attaches itself to a secure future, laying yourself off that disturbing debt-trap, and emerging as a prodigal lottery winner. Only the opposite is true. Multiple types of research show how about a third of or almost one percent of the lottery winners go broke, mindlessly spending the bulk.
There has been immense research on the tendency to spend unexpected windfalls on unexpected, unforeseen, mindless events of the winners’ life, rather than planning the investments. Elaborately explained by the economists and statisticians Guido Imbens, Bruce Sacerdote, and Donald Rubin in one of their papers, this trend stands true even for the lottery winners.
Several factors affect the tendency of being mindless with your lottery winnings. Some recognized elements have been impulsivity, inherited wealth, spending on poorly-researched investment portfolios et cetera.
Absence of futuristic financial planning
There are numerous examples in the history of lottery-winners, where the absence of a financial strategy has gotten them wealthy overnight, and dragged from riches to rags in just a while after that exotic night. Callie Rogers, claiming to be too young to handle 300 million Euros, is a striking example of unplanned, laid-back spending on luxuries, and drugs, and even breast implants for that matter, with no savings at all. Gerald Muswagon is an example in the history of famous lottery winners who went broke due to an investment in a failing business.
When these realizations along with the stories and the statistics are put together, ‘Easy come, and easy go’ is a phrase that fits perfectly for all the lottery winner lump sums gone wrong.
Probable reasons for the exhausting lottery lump sum
There is a fascinating study that highlights how an unseen coming in of a large sum of money triggers the need to spend, and the futuristic planning takes a backseat in this case. It is often than not noted, that people who need larger cash-in-hand the most struggle harder with maintaining their lottery winnings as they consider debt to be an unresolvable problem, and thus, spend the amount aimlessly on their immediate luxuries. There are various observations made regarding the economic statuses of the lottery winners playing a role in their spending rides too, as the low-income winners who are uneducated, fail to learn about their financial options and spend poorly and immediately.
If the theory about 1 in 3 lottery winners going broke is correct, it is an alarming situation. Nevertheless, with the large numbers of jackpots being won all across the globe, and with the intellectual, financial advisories present in the market, there is a ray of hope.
Lead a revolution, make educated investments from your lottery winnings in the future.
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