Managing a little, managing a lotBy Randell Tiongson on December 3rd, 2012
The fascination of people with lotto continues to be an enigma to me.
I once read that people who spend money on lotteries are people who don’t understand math — the probability of winning in the Lotto is so bad that it’s more probable for you to be hit by a lightning than win a jackpot. I’m not sure how true that common saying about lottery and lightning but I am certain that the probability on winning jackpots are very slim, to say the least. I stumbled upon a website on lottery probabilities and this is what it has to say on your chances: “You have better chances of getting into a car accident, plane accident, or struck my lightning, than to win your lottery.” Check out Webmath.com if you want to compute lottery probabilities. Okay, the statistics I mentioned are U.S. based so you might argue that the probability of our local Lotto will be better owing that there are fewer Filipinos compared to Americans right? Not really. “For the 6/55 grand lotto, Pulse Asia chief research fellow and statistician Ana Tabunda said it’s one in 28,989,675” — read the feature on local Lotto probabilities at ABS-CBN News.
Other than horrible probabilities, what is even more puzzling are the stories about those who do win the lottery. There have been a lot of documented information on how the majority of those who win in lotteries actually lose their money in very short periods of time. Some, even end up being in debt.
Here’s an interesting insight I picked up from the Huffington Post:
“Lottery agencies are keen to show off beaming prize-winners hugging oversize checks at celebratory news conferences, but the tales of big lottery winners who wind up in financial ruin, despair or both are increasingly common.”
“The National Endowment for Financial Education cautions those who receive a financial windfall – whether from lottery winnings, divorce settlements, cashed-out stock options or family inheritances – to plan for their psychological needs as well as their financial strategies. The Denver-based nonprofit estimates that as many as 70 percent of people who land sudden windfalls lose that money within several years.”
“Being able to manage your emotions before you do anything sudden is one of the biggest things,” said endowment spokesman Paul Golden. “If you’ve never had the comfort of financial security before, if you were really eking out a living from paycheck to paycheck, if you’ve never managed money before, it can be really confusing. There’s this false belief that no matter what you do, you’re never going to worry about money again.”
I have an interesting theory about this phenomenon on people losing a lot of money after being blessed with a windfall: If you can’t manage your money when it’s little, you wouldn’t know how to manage your money when it’s a lot (and I can personally attest to that)! In my line of work, I am constantly exposed to a lot of people’s money stories. Many of those stories revolves around how they can never seem to keep their money to save and invest despite the increase in their incomes through time. Talking to students, I would often remind them that if they can’t manage their allowances, they wouldn’t be also be able to manage their wages.
Let’s learn how to handle the little that we have so that in time, we would be ready to handle the plenty we will eventually have. The Bible says it best: Whoever can be trusted with very little can also be trusted with much, and whoever is dishonest with very little will also be dishonest with much. – Luke 16:10, NIV