Where does the money go?

If it takes an average of just 2-and-a-half years for UK lottery winners to blow 44% of their winnings, where does the money go?

Well, Camelot (the operators of the UK lottery) commissioned a follow-up report in 2002:

A third of winners (34%) buy a car straightaway, while one in 10 (11%) buy new clothes or new jewelery. For around four in five (77%) the most expensive single purchase is a house, followed by a car (14%). A quarter of winners give up to 10% of their winnings to their family, while nearly a half more (45%) give family eleven to thirty percent. Almost three in five give up to 10% to friends, while two thirds give up to 10% to charity.

Why do these winners figuratively throw their money out the window?

I think I’ve stumbled on a clue; they think that they can just win it all back again:

As to doing the Lotto, four in five jackpot winners (82%) still play every week β€” and one in five (21%) is very confident of winning again.

And, I think that in here is a very important lesson for those of you lucky enough to become successful with your Making Money 201 (Wealth Acceleration) activities:

Don’t spend your money as though you can just keep on making it all over again … you take on huge (hopefully, calculated) risks to reach your Number by your Date.

But, once you get there, switch to Making Money 301 (Protecting Your Wealth) because you just may not be so lucky the next time around πŸ˜‰

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11 thoughts on “Where does the money go?

  1. “I think I’ve stumbled on a clue; they think that they can just win it all back again:

    ‘As to doing the Lotto, four in five jackpot winners (82%) still play every week β€” and one in five (21%) is very confident of winning again.'”

    This is evidence of one reason for this phenomenon. I think another is that people who have not had a substantial sum of money don’t comprehend fully how to handle it, and so liquidate it much more quickly and easily than they would otherwise expect. No matter the cause(s), it’s sad to see how little financial literacy and discipline exist in the populace at large.

    TECHNOmancer

  2. so the winners keep 54% after spending some on a house and car and giving to friends family and charity. this is wrong somehow? what am I missing?

  3. Ill Liquidity says:so the winners keep 54% after spending some on a house and car and giving to friends family and charity. this is wrong somehow? what am I missing?

    Ill Liquidity, you should not take winnings and instantly give it away. First and foremost is to invest enough to keep money coming in all the time,once you have made sure your future is secured, perhaps then , you can be generous enough to help others. Thats their mistake, they begin giving away with no fore thoughts as to their own futures.

  4. @ Ill Liquidity – depends: will they suddenly stop spending after 2.5 years … or, is 2.5 years their spending ‘half life’ (or worse!)?

  5. LoL, Bill Gates and Warren buffet giving away billions(while keeping ‘billions’ for themselves to reinvest and build back up) is a completely different ball game than Joe Sixpack winning 10 million(just a tad different than ‘billion’) and loosing it all in 4 years because they have zero financial acumen.

    Not to mention Bill and Warren own multibillion dollar companies(and the complete financial know how that got them there in the first place) to help build their fortunes right back up before the average person can build up an emergency fund.

    Warren and Bill just ‘might’ know a thing or two about earning, building and protecting wealth over Joe Sixpack as well and might be more well equipped to give more without causing their own ill-effect.

    What most of these news reports about lotto winners loosing their winnings also don’t mention sometimes is the new drug addictions, sex addictions and other ‘go crazy because i’m rich’ afflictions that many lotto winners battle after winning. It’s simply too much responsibility and accountablity to bestow upon someone who can barely handle money well enough to make it paycheck to paycheck.

    You wouldn’t give a 6 year old a Ferrari and say “have at it son! You’re knowledgable and responsible enough and ready to handle this baby”. πŸ˜‰

  6. @TECHNOmancer

    I agree…I think it is the same thing with casinos. Even though someone wins the jackpot, they think that it can happen again.

  7. Ill Liquidity says:your right, these people are pure idiots!

    i hope your not referring to these people who spend their winnings and go broke. They are not idiots, they are simply not informed on how to handle money. your not an idiot are you? not, your here to learn how to handle your money . this is why i say we need to do a better job teaching our children , so this won’t continue into the future

  8. “It’s simply too much responsibility and accountablity to bestow upon someone who can barely handle money well enough to make it paycheck to paycheck.”

    @ Scott – I think this is the crux … which is why MM101 is a PREREQUISITE for MM201/MM301.

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