“Some may have and some may not… But I’m thankful for what I’ve got."
—from “Backs Turned Looking Down the Path,” as performed by Warren Zevon
A few weeks ago, when the lottery reached north of $1 billion, my husband joked that it was time to break down and buy some tickets. “Nine hundred and eighty million? I can’t be bothered,” he said. “But over a billion? Now that’s real money.”
We laughed, partly because neither of us has ever purchased a lottery ticket. And partly because the idea of being awarded over $1 billion for buying a ticket in a convenience store is bizarre. Tantalizing, but bizarre. I think I read that our chances of winning the prize with the purchase of one ticket were around 200 million to one.
But let’s assume we win! What would we do with an extra $630 million or so, assuming we pocket a billion dollars up front and pay the 37 percent tax rate on our windfall the first year? Spend, spend, spend, right? And go broke and become unhappy in the process? Maybe. Everyone knows that lottery winners frequently face financial ruin — complicated tax issues, spending to beat the band, giveaways to family members and friends clamoring for a piece of the pie. All of these reasons and many more often contribute to money problems for winners.
What was startling to me was the idea advanced by a Wall Street Journal article that even neighbors of lottery winners are more likely to go broke than average people. Why? You guessed it. Keeping up with the Joneses broke their budget. Neighbors of people who have experienced sudden wealth often feel compelled to enhance their own lifestyle to keep up with the spending occurring next door. We can’t help ourselves sometimes. We see new cars and boats and toys in the driveway next door, and it does something to us.
All of which brings us to an interesting issue that impacts us all.
How do we compare ourselves to others financially? One study asserts that it’s foolhardy and unprofitable to dwell on the financial picture of those much wealthier than ourselves. It tends to make us envious and depressed. It’s much healthier to compare ourselves with those who have less money than we do.
Or better yet, if we have to compare our financial situation to someone else, we might be wise to compare it to our own financial picture many years ago. This tends to make us understand how far we have come, and is also more likely to make us grateful for what has transpired since our salad days.
Margaret R. McDowell, ChFC®, AIF®, author of the syndicated economic column “Arbor Outlook,” is the founder of Arbor Wealth Management, LLC, (850.608.6121 – www.arborwealth.net), a “fee-only” registered investment advisory firm located near Sandestin.