On Tuesday night, October 23rd, millions of Americans went to bed disappointed that they lost the Mega Millions jackpot.
Except for one - still unnamed - resident of South Carolina.
One ticket matched every number drawn, and the owner of that ticket is the sole winner of the $1.6 billion jackpot.
WHY DO SO MANY LOTTERY WINNERS LOSE IT ALL?
However, a winning ticket isn't always what it's cracked up to be. One statistic floating around the internet says 70% of Powerball and Mega Millions winners end up bankrupt, although that is not confirmed.
Still, many lottery winners certainly do end up worse off financially than before they bought their ticket, and that's perplexing to those of us without hundreds of millions of dollars.
How can someone possibly lose that amount of cash, and usually in five years or less?
In short, many people who suddenly come into large amounts of money like lottery winnings, professional sports contracts, or an inheritance, get caught up in these traps:
They start giving it away to family and friends without a system in place to stop eventually.
They get caught up in addictive habits and behaviors like gambling or drugs.
They make too many purchases that depreciate like cars, extravagant clothes, and vacations.
They assume their money is a bottomless pit and spend accordingly.
They enter into investments without a proper understanding of how investing works.
They don't recruit the services of an attorney or financial planner.
IT'S NOT JUST LOTTERY WINNERS WHO GO BANKRUPT
As a financial advising firm that advises physicians and dentists, we know that poor money management is not just limited to lottery winners. The medical field attracts men and women of incredibly high intellect and drive, but that does not always translate into healthy financial habits.
Just as many people are shocked to learn that lottery winners go bankrupt, many are also shocked to learn that physicians and dentists can be swimming in debt despite earning a six-figure income.
But it's true.
Financially speaking, many new physicians and dentists believe they can manage the start of their career, a possible move to a new city, family life, social life, spiritual life, and their new six-figure income. But most don't realize the full scope of a healthy financial strategy.
This stress compounds with things like medical school debt and a fluctuating market. Without a broad understanding of how each financial decision affects the others, it's difficult to pay down debt, make your monthly budget, and save for the future in productive ways.
But that's precisely why a good financial planner is a wise investment.
WHAT DOES A FINANCIAL PLANNER DO?
A financial planner can provide you with two things you may not be able to acquire on your own: a comprehensive plan and accountability. The vast majority of people who go bankrupt a few years after receiving a financial windfall do so because they lack both of those things. The same is true for physicians and dentists.
Think of it like integrated learning. I can know everything there is to know about oxygen, and everything there is to know about hydrogen. However, if I want to quench my thirst by making water, I'll need to understand the impact that one has on the other. Despite knowing each element in their entirety, I have to comprehend the relationship to achieve maximum results.
Comprehensive planning is like that. You may know everything there is to know about a 401(k), and everything there is to know about a Roth IRA. But, if you don't understand how they interact, or the impact one will have on your broader financial goals based on things like the tax code, market volatility, and other factors, you may not achieve the maximum result.
Comprehensive financial planning comes with exhaustive knowledge of empirical evidence, a solid awareness of psychological and behavioral motivations, and a rigorous comprehension of both the utility and function of every law, code, and tool. All of these moving parts work together to form a connected relationship that we call your comprehensive financial plan.
In other words, financial planners understand how various elements interact and influence each other, and they are trained to put that knowledge to work for your benefit.
The lack of a robust and well-constructed plan and the discipline to execute it is a primary source of financial stress in the medical profession.
That's why the first statement in our firm's vision is to eliminate financial stress. We recognize the mental, emotional, relational, and spiritual weight finances can carry.
Financial stress is a high contributor to depression and anxiety.
It is a primary factor in physician burnout.
It is among the leading causes of divorce or separation from a spouse or partner.
And it contributes to the suicide rate of people age 50 and over.
Much of the stress people experience concerning their finances can be alleviated with a comprehensive plan and the discipline to stick to it.
If you're a physician or dentist and this sounds like something you could use, we'd love to help customize a plan just for you. Click the button below to contact us, and get rid of your financial stress.