Winning The Lottery Would Never Solve Your Money Problems

Dear Reader,

We’ve all heard the stories of lottery winners who could have been set for life… but are broke.

My rich dad said, “When the ‘money high’ hits, people feel more intelligent, when in fact they are becoming more stupid. They think they own the world and immediately go out and start spending money like King Tut with tombs of gold.”

My tax strategist once said to me, “I have been an advisor to many rich men. Just before they go broke after making a ton of money, they tend to do three things. One, they buy a jet or big boat. Two, they go on a safari. And three, they divorce their wife and marry a much younger woman. When I see that happening, I begin preparing for the crash.” 

All rich dad could say to that was, “It’s okay to buy a ticket now and then, but to bet your financial life on winning the lottery is a fool’s plan on becoming rich.”

Unfortunately, winning the lottery is how many Americans say they plan on becoming rich. Living your life with odds of one in a hundred million is a very high price to pay.

And even if you win, if you do not have a plan on how to handle the problem of too much money, you will go back to being poor. 

Three Lessons To Show Money Doesn’t Make You Rich

Lottery prizes are often in the millions of dollars simply because there are millions of people who want to become rich by being lucky. I find it interesting that this process of getting rich is not only the riskiest of all methods with the worst odds of winning, but it is a process that does not increase your financial intelligence at all. In fact, winning the lottery often reveals how low a person’s financial intelligence really is.

#1 Two-time lottery winner living in a trailer

 “Winning the lottery isn’t always what it’s cracked up to be,” says Evelyn Adams, who won the New Jersey lottery not just once, but twice, to the tune of $5.4 million. Today the money is all gone, and Adams lives in a trailer.

“I won the American dream but I lost it, too. It was a very hard fall. It’s called rock bottom,” says Adams.

“Everybody wanted my money. Everybody had their hand out. I never learned one simple word in the English language—No. I wish I had the chance to do it all over again. I’d be much smarter about it now,” says Adams.

#2  A poor boy who got lucky

Ken Proxmire was a machinist when he won $1 million in the Michigan lottery. He moved to California and went into the car business with his brothers. Within five years, he filed for bankruptcy.

“He was just a poor boy who got lucky,” explains Ken’s son Rick.

#3  Living on Food Stamps

William “Bud” Post won $16.2 million in the Pennsylvania lottery but now lives on his Social Security.

“I wish it never happened. It was a total nightmare,” says Post.

A former girlfriend successfully sued him for a share of his winnings. It wasn’t his only lawsuit. A brother was arrested for hiring a hitman to kill him, hoping to inherit a share of the winnings. Other siblings pestered him until he agreed to invest in a car business and a restaurant in Sarasota, Florida—two ventures that brought no money back and further strained his relationship with his siblings.

Post even spent time in jail for firing a gun over the head of a bill collector.

Within a year, he was $1 million in debt. He admits he was both foolish and careless, trying to please his family. Now he lives quietly on his monthly Social Security check and food stamps.

The Path to REAL Financial Freedom

There was a story in the paper of a man who won the lottery. He had a great time but was soon so deeply in debt that he considered filing bankruptcy. He was doing fine financially before he won the lottery. So to solve his problem, he went out and played the lottery again—and won. The second time, he hired coaches and mentors to advise him with his money. The moral of the story is: If you win the lottery once, have a plan for the money. Not too many people win it twice.

We have all heard the saying: “Rome was not built in a day.” The saying I use, whenever I find myself feeling overwhelmed by how much I have to learn, is, “How do you eat an elephant?” The answer is, “One bite at a time.” And that is how I recommend you proceed if you find yourself feeling overwhelmed by how much you may have to learn in order to make the journey from the E and S side to the B and I side of the CASHFLOW Quadrant.

To me, one of the primary reasons E’s and S’s have difficulty moving to the B and I side is because they are too afraid of making mistakes. They often say, “I have a fear of failing,” or “I need more information,” or “Can you recommend another book?” Their fear or self-doubt is keeping them trapped in their quadrant. If you want to be rich, you also need to learn how to grow your emotional intelligence and overcome fear.

Once you’ve overcome the fear that’s holding you back, it’s time to learn the fundamentals of financial education. 

Back to Basics

#1 Know What to Spend Your Money On

A person needs to spend more if they want to become rich, but they must know how to spend and what to spend on in order to become rich. As my rich dad said, “There are good expenses and bad expenses.”

Those who are rich and have high financial intelligence do everything they can to make sure they handle income and expenses properly. In short, they don’t “make” a lot of money compared to their overall wealth, and they don’t keep their wealth in their name but rather keep it distributed in trusts and entities like LLCs.

For most people, the idea of a high income is a good thing. For the rich, it is bad. For most people, the idea of low expenses is a good thing. For the rich, again, it is bad. In fact, it’s only those who are financially unintelligent who think that “making a lot of money” in the form of earned income is a good thing. 

As my rich dad said, “Money is just an idea.”

Once you understand the idea that low income and high expenses are good, you will understand one of the most pivotal realities of this idea called money. Not understanding this fundamental concept is why many rich people go broke.

#2 Understand the difference between an asset vs. liability

 An asset is something that puts money in your pocket, and a liability takes money from it. Take housing, for example. “Our house is an asset,” my poor dad would say. But, my rich dad saw things differently. “Your house is not an asset, but a liability,” he said.

You see, even though my poor dad thought of his house as an asset, the fact is that every month it took money from his pocket via mortgage payments, utilities, and upkeep.

Now my rich dad owned several houses. But instead of depleting his wallet, those homes were rented out. They generated enough income to cover his expenses-with money left over. That’s a true asset.

#3 Know what kind of income you’re working for

“If you want to get rich,” said rich dad, “don’t ask for a raise. Instead of asking for a raise, begin to ask how you can serve more people. In fact, if you are serious about becoming rich, you don’t really want a raise. If you get a raise, you are working for the wrong kind of money.”

I retired early by increasing my debt rather than trying to get out of debt, which is what most people try to do. The logic behind that thinking is that there is good debt and bad debt, and most people are loaded down with bad debt. 

The same is true with income. Most people are not aware that there is good income and bad income, and most people do not become rich because they work hard for bad income. When you ask for a raise, you ask for an increase in bad income.

Robert Kiyosaki

Robert Kiyosaki
Editor, Rich Dad Poor Dad Daily

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Robert Kiyosaki

Robert Kiyosaki, author of bestseller Rich Dad Poor Dad as well as 25 others financial guide books, has spent his career working as a financial educator, entrepreneur, successful investor, real estate mogul, and motivational speaker, all while running the Rich Dad Company.

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