For many people, winning the lottery is a dream come true. There are often millions of dollars that are awarded and life seems like it would be easier. For many lottery winners, however, life becomes anything but simple. It could be said, in fact, that winning the lottery won’t make you happy at all.
In multiple studies, people who win the lottery are twice as likely to file for bankruptcy every year than the general population.
Why is it that lottery winners can go bankrupt so quickly? Part of it is because of the rapid influx of money. When possessions are the gears that generate personal happiness, it is easy to go on a spending spree to buy nice things. It can even seem like that money will never run out! That’s the problem with money, however, because even hundreds of millions of dollars will eventually disappear under poor budgeting habits.
Three Fast Facts About Lottery Winner Bankruptcies
1. According to multiple studies, about 70% of all lottery winners end up going broke and filing for a bankruptcy.
2. About 1% of lottery winners will go bankrupt every single year.
3. In a recent study of lottery winners, only 55% of them felt like they were happier after winning the lottery than before it – 43% said that their money had no effect on their happiness.
Takeaway: If you look at this sample data, it is clear to see that money doesn’t actually buy happiness. It can purchase a peace of mind because there is an improved level of financial security so that there are fewer worries. 23% of lottery winners say, however, that the reason they were happier because they could buy whatever they wanted. There were even 2% of respondents who said that they were less happy with life after winning the lottery! Although it seems like a dream come true, without proper management, it could end up destroying a life instead.
What Does Winning The Lottery Actually Do To Life?
1. 95% of people who have won the lottery are still married after they’ve won all that cash.
2. 58% of people say that their extended family is happier because they were able to win the lottery and provide better financial support.
3. 37% of people stated that their families were less happy because of winning the lottery.
4. 9 out of every 10 lottery winners believe that their new family wealth will be gone by the third generation.
5. 83% of lottery winners have given at least some portion of their winnings to another family member, with siblings being the most likely family members to receive some cash.
6. 17% of families asked their family member who won a lottery of at least $100,000 for a cash gift. Lottery winners who won at least $4 million saw twice as many cash requests.
7. 90% of winners who already had a best friend say that their relationship is still intact.
Takeaway: Although it is easy to see how money could change someone or a family, it’s refreshing to see that for most families it doesn’t make too many changes. Relationships are intact for the most part and families are able to prepare for a more secure financial future. It is interesting, however, to see that most families believe that the money which was won will be gone in less than a century – even with proper investments. This means bankruptcy isn’t just a risk right now for a lottery winner. It also means that families over the long term may also be at a higher risk for a bankruptcy as well.
What Do Lottery Winners Spend Money On?
1. 44% of lottery winners had spent all of their winnings within 5 years of winning the lottery.
2. 4 out of every 10 lottery winners have made a focused effort to increase the amount of contributions to a charity.
3. 1 out of 5 lottery winners decide to take their first vacation outside of their home country for the first time with their winnings.
4. 7% of lottery winners decide to purchase a RV of some sort.
5. 75% of lottery winners who live in an apartment at the time of their win will move into a single family home.
6. 1 out of 4 lottery winners have purchased land or a home in a foreign country with their new money.
7. Only 3% of lottery winners have moved their children from public to private schools.
Takeaway: The most interesting statistic of all is that 1 in 3 lottery winners have gained weight since they won the lottery. The effect of stuff on happiness must also transfer over to dietary aspects as people purchase food items that they may not always purchase or choose to eat out more often because of their increase in available money. It is clear to see that lottery winners have a higher risk of bankruptcy simply because there is a lack of control within the spending process for a vast majority of people and little focus on long-term investments.
It Doesn’t Take A Lot To Increase Bankruptcy Risk
1. Lottery winners with a prize of at least $50,000 are more likely to file for bankruptcy within 5 years of winning their prize.
2. Overall happiness levels of lottery winners spikes when they win, but returns to pre-winning levels within months.
3. It’s not all bad – a 2006 UK study showed that lottery winners tend to have better psychological health than the general population.
4. For lottery prizes that are less than 1 year of a person’s income, personal happiness is not affected whatsoever and neither are the bankruptcy risks.
5. One of the greatest misconceptions that people have in winning the lottery is that it will change your outlook on life, but it does not change you as a person.
6. New Yorkers are shelling out more than $9 billion a year to try their luck in the lotto.
Takeaway: If you ever win the lottery, create a budget and a new life plan. Keep your spending in control. Don’t do anything crazy with your cash. Be smart about your investments and you’ll be able to pursue your dreams. If you don’t, you might just end up filing for bankruptcy too.