People who have problems handling their finances will not benefit from receiving a cash windfall or money gifts. The assumption that winning a large amount of money prevents a person from becoming a bankrupt is false as concluded based on the research done by three US universities.
Researchers from three US universities traced the winners who took home between USD600 and USD150,000 after winning from a specific lottery game in the US from April 1993 until November 2002. Comparison was done on those who won less than USD10,000 to those who got USD50,000 to USD150,000.
The researchers discovered that 5.5 percent of 35,000 lottery winners went bust in five years time. They found that people who won USD150,000 are just as prone to become bankrupt as those who win a small amount of below USD10,000.
It turns out that for some people, receiving some cash windfall only postpones or delays the situation from happening. These people had nothing to show for when filing for bankruptcy, no paying off debts or acquiring assets. Their winnings have simple disappeared.
What happen to the money?
The researchers hypothesize that these winners did not know how to handle a big amount of money and hence mishandled it. Another possibility is that winners have an “easy come, easy go” mentality. Found money may be easier to spend compared to hard-earned money. Another explanation is the lack of patience, wanting to spend the money immediately without thought of any future financial planning. Instant gratification is hard to resist for some people. It would take a huge amount of money to keep these people from going bankrupt.
The conclusion is if you encounter a person who has money problems due to mismanagement of his finances, giving him money to help him out will most probably not do him a world of good. Instead he needs to be guided or taught on how to properly manage and plan his finances.
Receiving or winning cash money anytime is something to be grateful for. The money should be appropriately used to pay down debts, purchase assets, invest or kept for a rainy day. Each of us have our list of priorities or goals we want to achieve when it comes to money. Just because the money comes “freely” does not mean we treat it less importantly and splurge immediately.
What would you do if you are lucky enough to win some cash money?