I read last night that a single person won two billion dollars in the US lottery last night, which sounds amazing! However, according to many people who have won the lottery, it isn't all what it is cracked up to be and many end up in worse positions in life than they did prior to winning.
I would like to test that theory.
Anyone want to give me two billion dollars?
I do understand why people struggle though, as there are so many "new pressures" that arise once there is more money on the table and let's face it, the average person has zero experience with being a "one-percenter". This means that despite their "If I had.. I would..." statements, once they have, they pretty much never do what they think they would. This is because we aren't actually very good at predicting our behavior based on conditions we haven't got a relatively good understanding of.
And this comment from 
The reason is that while I have "expensive" tastes (relative to my earnings) in some things, they are generally not in short-term consumables and entertainment, they are in functional needs.
For example, during the recent renovation of the kitchen, my wife and I had to make a lot of purchase decisions based on our budget, as well as our tastes. Had we had "endless" amounts of money, other than paying for people to do more of the work, I don't think the final cost would have been much different than what it was. the only additional expenses would be things that we will get later anyway, like the kitchen stools we want, stools that are still in production since the 1940s, but are also selling secondhand for over 50% of the price of new, even in average condition. They are consumables, but with a long lifespan.
A million dollars doesn't go far.
But, it runs even shorter when it is spent on non-generative consumables and activities, like cars and opulent holidays. For me, I have no idea how much I would need to have liquid in order to feel I can afford to buy even a mid-range luxury car, but a million dollars isn't going to cut it. It is the same with a house, as I have no interest in having a palace that is a large investment in and then the maintenance and care on top, when it doesn't bring anything I value, to my life.
Now, two billion dollars is an insane amount of money and would literally buy 5,000 houses similar to my own, but as Bozz said above, a million is enough as he has "other stuff" in place too. This means additional income, whether it be active like a job, or more passive like investment returns. Either way, "income" is important and probably where the lottery winners go wrong, as so many of them seem to forget about their need to keep refilling the well from which they are drawing from. And often, the "investments" they do make are instable and uncertain, as they are suddenly confident that because they have the wealth, they have the mindset and abilities of the self-made wealthy.
Of course, if this was the case, they would have already been wealthy and likely wouldn't have been playing the lottery in the first place, as the wealthy often don't play the lottery, because they see that the potential to win is not worth the weekly expenditure. They don't tend to have the "someone has to win" attitude, they generally have the "play the odds" attitude, where the gains might be smaller, but the chance of gain is far higher. This means that there is more certainty in the gains and that they can be rolled back in to increase the amounts gained over time.
It isn't sexy.
However, it reminds of a quote from the movie the Patriot and I think it also appeared in American Sniper:
Aim small, miss small.
Hail Mary plays are unlikely to complete by definition. They are acts of desperation where in order to win, there is no other opportunity than to play the long odds and throw deep down field, hoping that it will be received for a score. While there are times this might be needed as it is the only card on the table, good financial practice shouldn't rely on these kinds of plays, because while they make great highlight reels, the odds are not in their favor. There is a survivorship bias and the winners are remembered, not the many losers.
Yet, as humans, we tend to favor the highlight reel plays, because they are more interesting, engaging and make us feel alive. We want to be part of the excitement, we want to feel that thrill and exhilaration - and when we are newly minted wealthy, we will feel somewhat indestructible and our confidence goes up, because we have a safety net of resources behind us. A few losses don't matter - we can absorb them.
This happens at much lower levels too, where power "goes to the head" where for example, people who have been recently promoted to have more responsibility in their company, can start to become a little "too" confident in their behavior, which will generally lead to pushback from colleagues eventually. Give someone a large a ´mount of money to do with as they please and what they "please" is probably not overly good financial hygiene, which leads to various knock-on problems, which they aren't necessarily accustomed to dealing with - like family demands.
A lot of lottery winners cite family and friends pressures and losses to their worsening of experience, where the people closest to them want to benefit from their windfall also, a tap they can expect to always remain open. Just look at the behavior in crypto around airdrops and maximization practices and that is a good indicator of human behavior when there is "free money" on offer.
Now, winning the lottery is not in my future, as I never have a ticket, but it is an interesting thing to think about in terms of how we predict our own behavior. We often think that we would do this, and never do that, but over the years, the amount of stories that contradict our predictions, is telling. And, this means that even without winning the lottery, we are likely already harboring the behaviors and mindset of those lottery failures, which means that at a lower scale, we are acting the same.
They say "drunk with power" - and money is power. But like drinking, our behaviors are amplified. There are the drunks who become happier, the drunks that become depressive, the drunks that become aggressive. When sober, there is more impulse control, more thought, higher barriers, less freedom, a greater sense of responsibility; remove these behavioral restrictions and we don't necessarily act as well as we might while sober, but in the drunken moments, we are still doing what we like, even though we might have a moral hangover the next morning.
We might think that we are better than that, but untested, how do we know?
It's a lot of lottery.
Taraz
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