You may have wondered who the anonymous winner of the National Lottery’s first ever R100 million PowerBall jackpot is, and you may even admit to feeling envious. Which is okay, because all of us could do with a million or so in the bank, right?
What you might not have considered is that there are always two sides to Lady Luck’s golden coin. Many windfall winners experience its flip side to their detriment. Besides being besieged for money by friends, family and strangers once they get wind of their winnings, there are many temptations to squander it. And if you know very little about managing money, you may not even recognise them as temptations in the first place.
One of the most Shakespearean of falls from mega-wealth to poverty is that of former UK dustman Michael Carroll, who after squandering his £9.7million jackpot on drugs and high-living, is now an overweight alcoholic and working as a painter because he can’t get his old job back. Carroll clocked up a string of criminal convictions, all while he blew nearly his entire fortune on wild parties, cocaine, prostitutes, luxury cars, jewellery and cash hand-outs to hangers-on. He boasted that he was smoking £2 000 of crack cocaine every day, and after his wife left him, that he was sleeping with four prostitutes a day.
A similar fate befell Callie Rogers, who won almost £2 million on the lottery in 2003 when she was only 16, but ended up cocaine addicted, depressed and suicidal after losing custody of her children. Rogers went on a massive spending spree, splashing out on four homes for her family, flashy cars, designer clothes, partying and breast implants.
Being accustomed to managing fortunes is no guarantee either. In the case of Andrew Jackson Whittaker in the US, he was already a millionaire when he won a whopping $314.9 million jackpot, but he went off the rails and became a heavy drinker, lost his wife and was robbed numerous times, once of more than $500 000 at a strip club.
In the case of William Post, who won $16.2 million but ended up in debt, his brother was arrested for hiring a hitman to kill him so he could inherit the winnings.
Thembi Tulwana, spokesperson for the National Lottery operator Gidani, says a common mistake of Lotto winners is to ecstatically spend the money without thinking about the future. “That is why we have counsellors who keep in touch with the winners for seven years afterwards, guiding them with not only financial but emotional advice.
“The counsellors look at the winner’s lifestyle, their family dynamics, investments, and come up with a clear and understandable path of action for investment. The trick with big money is to invest it and live off the interest, not to spend it until it’s finished,” she says.
The emotional counselling is equally important, she says, because the winner will often begin to engage in risky behaviour. “The spouse might complain that her husband (who won the jackpot) suddenly drinks a lot and doesn’t come home anymore, and this starts to damage family life,” says Tulwana.
Johannesburg psychologist Wendy Hay, who has counselled the suddenly wealthy, says the reality is that many who win vast amounts spend it within as little as two years. “Some have died as a result of a risky lifestyle,” she says, “and I know of one case where a man was murdered.
“People who are going to be successful have the ability to understand finance – not accounting finance, but the fact that money has power. There is an understanding that if their money is to last, or even grow, they have to take responsibility for expenditure and guard their capital as the goose that lays the golden egg.”
The personalities who will be able to achieve this, she says, are those who can delay gratification. “Emotional spending is common with most of us, but it needs to be considered and responsible. Placing money in accounts where it earns interest and never spending more than the interest is emotionally as well as intellectually intelligent,” she says.
Another needed trait is having firm boundaries. “Many people squander money on making other people happy. There is an inability to set limits and respect one’s own needs. This is not about being mean. It is about being responsible towards the power of money and respecting the role it plays in life.”
Setting boundaries is linked to self esteem, she adds. “People who are socially secure are less likely to be manipulated or use money to buy friends.”
By extension, people who keep working because they feel fulfilled in their work, or use their money to enhance skills, are most likely to retain their wealth. “They don’t need money to find self worth, they find self worth in their attitude towards their work and life in general,” says Hay.
In her book Manage your Money, Live your Dream, Sunel Veldtman writes: “There is nothing wrong with overseas holidays and holiday homes, but if it requires a lifestyle that takes you away from your core values, these things are unlikely to bring you happiness… more money doesn’t necessarily bring more happiness… How we earn money, spend it, save it, invest it and give it all affects our happiness. Everything beyond covering our basic needs is a matter of choice. How we exercise those choices will have a profound effect on our own happiness and indeed the welfare of the world.”
Studies on the link between money and happiness, she continues, have shown that wealth increases happiness when it lifts people out of abject poverty into the middle class, but once there is enough money to cover basic needs, the correlation between money and happiness disappears. “In fact, some surveys show that hut dwellers in Africa scored at the same level of a happiness index as American millionaires did,” she writes.
In her career as an advisor to high-net-worth individuals, Veldtman says she found it was not the wealthiest clients who were the most satisfied with their lives, had the happiest retirements or enjoyed the closest family ties. “I came to know people who had more money than they could ever spend in a lifetime but were never content. There was always a hunger to have more,” she says.
Veldtman often advises her clients to get in touch with their own value system in order to find a meaningful way to spend their money. To do this, ask yourself what do you love doing, what gives you energy and fills you with excitement and what secret passions you have that you may never have shared with anyone, she suggests.
“Not all of us are called in the same way, but every one of us can make a difference. A life lived only for your own gratification is very rarely a meaningful life,” she says.
In this vein, Hay has observed that spiritually aware people have an advantage in that they “usually want to remain within their integrity, and so act with a conscience and responsibility”.
Rich or poor, stable relationships are also fundamental to happiness, and that boat will be inevitably rocked by a sudden windfall.
“There is a lot of stress in change, even positive change. Good, secure, nurturing relationships will go a long way towards maintaining balance and security. It will provide sounding boards and protect against human predators,” says Hay.
As has been seen over and over, the fastest way to fritter away a fortune is on drugs, porn, prostitutes and gambling. “Any addiction is going to spell disaster and possibly death,” says Hay.
“My advice generally would be to go a little wild, settle debts, celebrate, take a holiday, be generous, and give to a charities that inspire. Once that is done, put the money in a trust or accounts that cannot be touched for a while,” she says.
Self restraint is difficult when the adrenaline is pumping and the impulse to lose control is strong, which is why the National Lottery insists on counselling and offering financial services to its Lotto winners. The alternative is, as they say, “easy come easy go”. - The Star