Easy Come and Easy Go

Statistics show that most lottery winners have none of their winning left after 2 years. Of NHL hockey players 70% are broke 2 years after they have stopped getting paid for playing hockey. The numbers are similar for all professional sports. The money is easy come and easy go. You would think that they make so much that some would be left over for life after the windfall income stops.

Even business people get caught in this trap. Anytime you make big money there are risks. There are good months and bad months. If you don’t save you must have a budget spreadsheet plan to reduce costs in the bad months. There is always the risk that things change and the market ends. If you are an executive, there are always downsizings and you can get caught in one. To succeed you need to be confident that you will be there tomorrow. There is no better way to be confident than to know you have an exit strategy should things go out of your control.

For young athletes and lottery winners there is a euphoria that can blind them to financial realities. Making big money can lead to a big ego. Big egos cloud clear thinking. Muddled thinking leads to mistakes. Making mistakes leads to losing big money. So when you do start making big money, control your emotions and your ego. Learn the basics of spending less than you make. That is the surest way to sustain your success. It’s how much you spend not how much you make that is the bottom line for sustainable success.

When you go from making a humble income and having little wealth to being rich you need to learn the skills that will keep you rich. This should be a top priority for those who find themselves in this situation. This should be a top priority for anyone because it is those skills that will keep you rich and for those who do not have a windfall, they will make you rich. You need to learn how to manage your financial personality.

One of the reasons that people get in trouble with personal finances is that the first person that you lie to is yourself. You have 106 different ways that you lie to yourself about how you manage your personal finances. Build your financial security on reality and truth. Construct your personal finances the way the books say. Start with a budget spreadsheet. Control costs. Save money for a rainy day. The reason you hear these old saws so often is that they work for those who have long term success.

Virgil Jones is a consultant in the area of personal finances. Virgil has writen for online ezines such as Money Saving Tips