Money can ruin your life

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I recently read a story about the winner of a popular reality television show who on winning received one million dollars. He was interviewed years later and asked if he had any of the million left. He told a story about him receiving his normal wages will he was participating in the show and calculated he had three and a half thousand dollars in his bank account when he left the show. To his surprise his fiancé spent the money on a dress and compared the cost to his million dollar haul and bid him not to be a cheapskate.

Handing someone, uneducated about money, a million dollars is like handing a child one hundred dollars. The money burns a hole in their pocket and must spend it and have nice ‘stuff’. Before they know it, it’s all gone.

So the story goes, he bought a house ($415,000)1 and a couple of cars. He quit his job to be a stay-at-home dad and was quoted as saying he took a bit of a hit due to the Global Financial Crisis. So, we can assume that he had around $500,000 left over to invest.

Given that he no longer works means there is only one income (wife) coming in and there would be a reliance on her paying the household bills including the rates, vehicle upkeep and insurances or dipping into their funds. The question is: at some point the money will dwindle if they continue to live a ‘comfortable’ life. Are they able to handle the pressure of ‘change’? Can they adjust their spending before that happens without it affecting their relationship? 2

I have read many stories where similar things like this have happened and it destroyed relationships mainly because both parties had entirely different money mindsets. The other thing is that they don’t have goals. They suddenly have money and just ‘enjoy’ the freedom of spending until it slips away.

Suddenly the money starts to run out and people can’t control their ‘freedom’ and at first suffer from denial, then they start buying stuff and justify it by stating it was ‘on sale’. Then they start lying about the price tags.

Unless a couple come to terms with ‘having money’ and how to manage it, it will slowly consume them. Unless they educate themselves on wealth protection they will bumble their way back into the debt cycle. I have read stories about people winning the lotto and in a few very short years are broker than they were before winning it and now divorced.

When you start your road to financial freedom you need to have a plan. The plan must involve everyone who will contribute to the goal. You must have contingencies also. You know you’re on track when your income exceeds your expenses. BUT, also have some fun on the way.

 

  1. House Price http://www.canberratimes.com.au/zoom/archive/rSHD050515102R16IHQBD
  2. http://www.aol.com/article/2014/11/24/7signs-money-ruining-marriag/20995579/