Riches to Rags: Why Most Lottery Winners End Up Broke

Flickr/John Carleton

Flickr/John Carleton

Here’s an experiment for you: Place a small bowl of M&Ms (or your fattening/sugary vice of choice) right within reach. Leave it there all day and then count how many you ate. Think that was a test of self-control? Now try putting a huge bowl in the same place. We’d venture to guess you’ll end the day with as few left at the bottom as when you started out with less.

Indeed, it’s hard to stop when it seems like you’re hardly making a dent. That’s because we tend to adjust our consumption based on what’s available to us – and we aren’t just talking about candy. Many people treat money the very same way.

From lottery to bankruptcy

According to a 2010 study by researchers at Vanderbilt University, the University of Kentucky and the University of Pittsburgh, the more money you win in the lottery, the more likely you are to end up bankrupt.

The authors divided past lottery winners into two separate groups: Those who had won cash prizes between $50,000 and $150,000, and those who had won $10,000 or less. What they found is that those who had won the more sizable sums were more likely to have filed for bankruptcy five years later. Similar research from the National Endowment for Financial Education estimates that 70 percent of people who had unexpectedly come into large sums of money ended up broke within seven years.

Now just imagine what millions could do…

To read more – and find out why most lottery winners end up broke – check out my new article on GoldenGirlFinance.com.

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