Jim’s Daily Rant. Surviving Becoming Wealthy.

Question: What percentage of jackpot winners go broke?

Answer: Approximately 70 percent of lottery winners end up broke within five years of their windfall, according to a widely cited statistic that reflects the financial literacy gap and the challenges of managing sudden wealth. … with some indicating that 33 percent of winners file for bankruptcy, meaning they not only lose their money but also accumulate debt. Source

Why Do They Go Broke: The high rate of financial collapse is attributed to factors such as lifestyle inflation, poor investment decisions, predatory relationships, and a lack of financial planning education.

        Same Source

In his book Rich Dad, Poor Dad, Robert Kiyasaki said that there are only two types of money problems: Too Little and too much. The problem with too much money is people are forced to protect it for fear of losing it. And if they don’t they will loose it. Newly rich people don’t realize this.

He also says that wealthy people that look like they are wealthy soon become poor. People that are wealthy but don’t look like it retain their wealth. To rephrase this, if you show it off to impress others you lose your head and lose it.

Here are some suggestions on how to protect your wealth:

1) Tell those that know you are wealthy that you invested most of it in real estate and are sitting it out. They cannot hit on you or arrange to rob you. They will leave you alone.

2) Hold yourself to a budget and leave credit alone.

3) Spread your savings around. Some in a bank, some in precious metals hidden in the ground or attic, some in paper that you hold in your possession, and a little in a home safe.

The home safe is if a burglar threatens death let him have the vault contents (cheap insurance).

4) Drive used cars or better still, trucks. Live modestly.

If you drive a car to impress friends, you have the wrong friends and will soon be broke.

5) Know thyself. What made you happy before you became wealthy? Let me rephrase that, what is your passion in life? Once you know that, only a small amount of money is required to make you happy as hell and keeps you stable in life. Otherwise, a divorce cuts the money in half right off the bat and you will end up divorced again, possibly cutting the half in half again.

Boredom with wealth can cost all of your wealth as you search for who you really are. Find out before going spending crazy.

6) Use most of your wealth to generate income for the purchase of happiness or the gain for your self inner happiness by helping others and still providing a living for yourself.

7) Become a Family Banker financing extended family so you are giving and receiving at the same time. This puts your wealth to good use. See: Family Banking (by Jim Costa)

8) Avoid guilt and shame for being wealthy. Both of those two illness creating emotions are caused by that person doing it to himself. If people don't know you are wealthy they cannot put you in a position to turn them down and then feel shame and guilt for not helping or sharing with the less fortunate.

That way, you are free to donate anonymously or on the spur of the moment, feeling good about yourself. But it is not being done because it is expected. This will protect your health and never seeing yourself as a “miser”.

9) Humble yourself and study personal finances. Realize that if you hire a Financial Consultant they want to sell you what they have in their briefcase. Study finances then hire a consultant if one is needed.

10) Begin asking yourself what you would do with your life if you were a millionaire. This will help you discover your real passions and purpose in life.

11) Reread often the opening statement of Why Do They Go Broke above.