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Why Lottery Winners Go Broke

Why Lottery Winners Go Broke

Money Maroon

Ever since I understood the concept that buying a lottery ticket gives you the chance of winning millions, I wanted to win the lottery. As I got older, I realized that the probability of winning was extremely low, as such, I rarely ever play. When I do play, I see it as a donation to the State’s education system as a percentage of the lottery usually funds education. For the lucky few who plays and wins, congratulations. However, for winners there is happiness, that is typically followed by sorrow and many times tragedy. It makes you wonder, why does such tragedy follow many lottery winners? Looking at the financial side, why do lottery winners go broke?

Lottery Winners Go Broke Because Of Inexperience Money

A lot of lottery winners are not math or financial whiz. The fact is, the more educated you are, the less likely you are to play the lottery. It is simple, you understand that the odds of winning is extremely low and as such you do not play.

Those who win the lottery, tends to be those playing the lottery which is in effect proportionally not the most educated with regard to finances. Most lottery winners have the issue of having a large sum of money and not knowing how to maintain it. 

Many lottery winners fall prey to their wildest financial dreams. The dream of having one or more mac mansions, new expensive cars and other toys that are wanted but not needed. With a scarcity mentality, many lottery winners are frivolous with lottery winnings. Some winners see their winnings as “free money” to be spent. While individual purchases may not put a dent in the overall winnings, they can quickly add up if winners don’t keep a close eye on what they are spending. A bigger home comes with a bigger bill to upkeep. Luxury cars come with larger insurance and repair bills.

lottery check - why lottery winners go broke

The Payout Is Not As Much As You Think

When taking the payout from the lottery, winners usually have a choice. The choice is typically between taking a lump-sum or a fixed payment overtime. If you take the lump-sum, sometimes it is only around 60-75% of the advertised prize. This can leave winners with a lot less money than they expected. Then do not forget about the taxes. In most jurisdictions, lottery winnings are taxed. As such, in the end, while you will have a huge sum of money, the sum may not be as large as others think it is. Therefore, it may be bit more difficult to rebuff family and friends when they falsely believe that you have a lot more than you actually do.

Lottery Winners Go Broke Because Everyone Knows That You Won

In many places, a condition of winning the lottery is that your name is made public. Many lotteries do require that basic information about winners are made public. For example, name, city and the amount won.

When every one knows that you won millions of dollars, you will have long lost friends and family coming out of the woodwork. They will all come calling.  Many new lottery winners will not be well equipped to say no to friends and family. Once family and friends learn of the windfall, they will have expectations of what they should be entitled to.

But also, there are complete strangers who targets lottery winners. Some with sad stories, others with investment ideas and still others who aims to rob, maim or kill lottery winners.

Typically, lottery winners go broke as a result of a million cuts. One bad investment idea or falling for one sad story will likely not completely deplete the millions won. However, not paying attention and learning to manage your money will eventually lead to bankruptcy or worst.

Addiction

There is the saying that money does not buy happiness, it only amplifies who you are. A jerk before having a lot of money, will likely be a jerk with lots of money after winning the lottery. If you were previously prone to addiction prior to winning the lottery, now you are a wealthy individual who is prone to addition with the financial means to support that addiction. If you were an alcoholic before winning the lottery, you are now a very rich alcoholic. For those with addition issues or tendencies, winning the lottery and having the financial resources to support an addition habit is dangerous and can be deadly.

For those who cannot handle stress, winning the lottery will add a lot of stress. There is some stress that comes with having the money. You will like be stressed about how to maintain it, how to manage it, how to handle the constant requests for handouts, and how to face resentment (because it will come from family and friends). For many, alcohol and drugs are the remedies often sought with stress. It is not uncommon for many lottery winners to blow huge sums of their winnings on drugs and alcohol. At times, this is in an attempt to cope with their new lives as lottery winners.

Not Asking For Help

As mentioned above, many lottery winners were not finance majors in college. As such it is probably in their best interest to seek advice from qualified financial professionals. However, despite the fact that sudden wealth can cause lots of financial complications, very few lottery winners seek professional help. Very few lottery winners seek out professional advice on how to grow and or maintain their wealth. Without the requisite knowledge of how to manage such an instant inflow of funds, many lottery winners mismanage their money and go broke.

Conclusion

With winning the lottery or with any other instant financial windfall, be careful what you wish for. Many lottery winners go broke. By not being able to handle the stresses of winning the lottery, you could end up being a lottery winner that goes broke or worst.

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Video Summary

Retirement plan

Do not Become Someone Else’s Retirement Plan

Money Maroon

No matter how hard you work or how much money you earn, you are only a few bad choices from finding yourself in the poor house. Sometimes, the decisions that we make are in view of perceived obligations. For example, many financial decisions are made in view of obligations to family and friends. On your path to financial independence and early retirement, do not become someone’s retirement plan.

Focus On Your Retirement Plan

As the statement goes, put on our oxygen masks first before the person next to  you, including family. This also applies to your plans for retirement. You may be able to make head way in saving toward your retirement by living below your means, saving, and investing. However, it is also easy for a family member or two to constantly ask, manipulate or steal what you have saved. The stories are easily available if you perform a simply search, and should serve as a warning.

What Is Yours Is Theirs

There are so many stories of an individual or a nuclear family making progress by living below their means, saving and investing over time. As this family rises and increases their wealth, it is only natural for families and friends to notice, and notice they will. We can try all we want to hide success, but others will notice how you live your life. While you may try to be the millionaire next door, your close family knows better. While you may drive the standard car and live in a standard house, your family will be well aware of your job and will likely have researched your salary. It is only a matter of time before assumptions are made with regard to your wealth. With assumptions, it is common for others to begin to think that what is yours is also theirs.

As knowledge of your life is shared by family and close friends, you will be seen in a different light. When financial hiccups occurs, you become their bank. If they are having issues with housing, they will show up at your door. If you do not take steps to stop the initial requests or actions, you will pay for it later.

Of course, the proximity to family and friends will matter. The closer you are to those with a specific personality type, the faster the devolution into others thinking that what is yours is theirs. The further away you are, the less interaction and the less issues you may have.

Blocking retirement plan
Do not allow others to block your financial flow

Reason Does Not Matter

It really does not matter if you and others all had the same opportunities. It does not really matter if you choose to live below your means while others live it up. You may sacrifice all you want to maintain your life and that of your family, but it is simply human nature for those around you to think and believe that what is yours is also theirs. Especially when others believe that you have more than you need or that you do not deserve what you have.

What To Do

The fact is, you must learn to say no. You cannot become someone else’s retirement plan. You must stand up for yourself and your family. Others may claim that you are mean, but you must put your oxygen mask on before others. You cannot find yourself bank rolling other peoples lives, especially if these individuals do not understand how hard you have worked for what you have. 

It is all around us. Others have nice cars, vacations and homes that dwarfs the size and costs of yours. However, these are the first to reach out for aid and have a deep seated belief that what is yours is theirs. When times are hard, why do you have so much and they have so little, even though when times were good they had more than you and in effect wasted it.

We are not saying that you should be selfish and not help others. Help others and give. Success is not achieved alone and in isolation. What we are saying is, know what you are doing. Know the consequences of your actions. Know what saying yes today will mean for tomorrow. Do not become another person’s retirement plan. Know when to say no.

Conclusion

No matter how hard you work or how much money you earn, you are only a few bad choices from finding yourself in the poor house. Sometimes, the decisions that we make are in view of perceived obligations. For example, many financial decisions are made in view of obligations to family and friends. On your path to financial independence and early retirement, do not become someone’s retirement plan.

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Just say no

Now, Just Say No

Money Maroon

When was the last time that you suck it up and just say no to your children? As we move toward the next year, again we enter the season of spending. One of the major driving force behind the excessive spending during this time of the year is the effort to please our children. However, spending money that you do not have not only hurts you, it also hurts your children. By saying no and living within your needs, you will be teaching your children delayed gratification, self control and impact their future for the better.

Saying One Thing And Doing Another

It is always amazing how the same folks who announce that they do not have the funds typically have the latest and greatest. It is amazing how the co-worker who is struggling financially has the required funds to take a vacation. It is also interesting how not only do they have the latest toys and gadgets, but so do their children. Where are they getting it from? 

Let us not speculate. However, it does offer an interesting view into other people’s habits. This is not new, the act of saying one thing, yet doing another. With this in mind, why are we surprise when our children act in a similar manner?

Just Say No To Your Children

It is always difficult to tell our children no. It is difficult for us to punish them. However, at a certain point we must perform our roles as parents for their growth and development. Just as you work with your children with their school work, teaching them how to play a sport or how to be a contributing part of society, so must we say no when it is required.  Financial literacy should be apart of their development.

In the holiday season, just say no. Whenever you are asked to spend what you do not have, just say no. We understand that this is easy to say but difficult to do. This is especially the case when your children have friends who are receiving the new and latest toys. In some cases we satisfy our children’s wants to prevent a tantrum or a melt down. For many parents, it is also a matter of ensuring that their children fit in socially. However, if we are teaching our children to have what others have no matter the cost, financially and otherwise, are we really doing them a service?

If our children’s friends have the newest and most expensive phones or other electronic devices, should your children also have those items? If you cannot afford it, you must have a conversation with your children. It may be the most opportune time to discuss money and how money works.

saying no
saying no

Think Long Term

If we are purchasing material items that we cannot afford, we are not only putting our financial future in jeopardy. Our acts are also putting our children’s financial future in jeopardy as well. We are essentially teaching our children that they can purchase things that they cannot afford.  Do not be surprise by our children’s decision to put things on credit and overspend in the future. Note that our children are watching. Our children model their behaviors after what they see and hear. Believe it our not, we can have a huge influence on their future spending habits. Consider the current state of finance today, it is no wonder we have so many finically illiterate folks. 

Let us make our children’s financial literacy apart of what we are teaching. Let us act as parents. Like with school and so many other tasks, we are the parent and not your children’s friend. Let us aim to try and find a way to teach them such that they can in the future be better than we are. Let us give them the tools to make better decisions.

Conclusion

When was the last time that you suck it up and just say no to your children? As we move toward another year, again we enter the season of spending. One of the major driving force behind the excessive spending during this time of the year is the effort to please our children. However, spending money that you do not have not only hurts you, it also hurts your children. By saying no and living within your needs, you will be teaching your children delayed gratification, self control and impact their future for the better.

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Empty piggy bank

If You Are Feeling Broke, It’s Ok

Money Maroon

If you are feeling broke, know that it is ok. The feeling of not doing enough or that you are behind as compared to others is a normal. As human beings, we are hard wired to compare ourselves to others. It is natural. It is also natural to feel like you are not where others are when you look at their material possessions. But keep in mind, you are typically only seeing what others are willing to show you. You are not seeing what is going on behind the scenes. Many engage in fake it till you make it and  project a wealthy facade, but are in tough financial straits. Focus on you and do not concern yourself with what others are doing.

Empty wallet
It’s ok to feel broke…. but are you?

The Story

You have likely heard a similar story, but here we go. Around the corner is a neighbor who has one of the most beautiful homes, with an up-kept yard and with hedges always cut. This neighbor has two kids, a dog and two luxury cars which are replaced every few years. The neighbors are very social in the neighborhood, for gatherings, they are the life of the party. These folks take vacations each year to exotic locations, essentially these neighbors are the envy of the neighborhood. They are the picture of the American dream. They exude confidence, money, success and privilege.

Eventually, you may begin to notice some cracks in the happiness of your neighbor and this goes one of two ways. (1) They may stop attending certain events and may downsize the cars and eventually note that they are moving because of work. (2) If they chose to keep up appearances, eventually you or another neighbor may begin to get inquiries about who lives at their home. Typically, these are the early signs of someone hunting for your neighbors assets. It may be their cars or a boat in the back yard. Eventually, one or both cars will be towed away and repossessed. Sooner or later, a sign will be placed on the home that it is in foreclosure. 

It is amazing how often this story plays out.  Keep this story in mind when you begin to think or feel broke or inadequate as compared to others.

You May Not Be As Broke As You Think

The events above is typically shocking to all and will be the subject of much gossip. Some may enjoy seeing this fall from grace but many will be left reflecting on their previously perceived short comings. The fact is simple, you only see what others want you to see. If your neighbor has luxury cars you have no idea if they are leased or owned. You have no idea if they had previously won the lottery, you also have no idea if they have inherently wealth or are up to their eye balls in debt. The moral of the story, do not compare yourself to others.

Live your own life and stay in your lane. Be happy for those who are doing well or appear that they are doing well. Know what you are doing and focus on your financial goals and not what others are doing. It is ok to feel broke, it is normal to compare yourself to others. But do not act in a manner to compete with others. Live your life. Stay in your lane.

Do You

If you are pursing early retirement, do so. While it is difficult not to compare yourself to others, keep focus on your goals. If your aim is to save 50% or more of your income, understand that you may then not have the nicest cars, fashion or take the same vacations as someone who do not save as much as you do. Just remember that we are all on different paths. You may feel broke or inadequate, but your bank account may say otherwise.

Whenever you feel financially inadequate, take a look at your assets. Look at your bank account and know that you are one day closer to your financial goals.

Conclusion

If you are feeling broke, know that it is ok. The feeling of not doing enough or that you are behind as compared to others is a normal. As human beings, we are hard wired to compare ourselves to others. It is natural. It is also natural to feel like you are not where others are when you look at their material possessions. But keep in mind, you are typically only seeing what others are willing to show you. You are not seeing what is going on behind the scenes. Many engage in fake it till you make it and  project a wealthy facade, but are in tough financial straits. Focus on you and do not concern yourself with what others are doing.

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Buy The Dip

Buy The Dip And Hold

Money Maroon

Here, we are not giving financial advice, but this blog provides a great platform to share ideas and discuss experiences. One of the many back and forth that are debated is whether or not to invoke the buy the dip strategy versus the typical dollar cost averaging. But there is an in-between that we should not overlook. If you have a dollar cost averaging strategy, consider integrating a buy the dip and hold strategy.

Dollar Cost Averaging

To quickly summarize, dollar cost averaging is an investment strategy where the investor invests the same amount  across a set period of time. For example, investing the same amount each month regardless of whether or not the price of the stock increases or decreases. This can reduce the impact of volatility on the overall purchase. 

With dollar cost averaging, you are not buying an asset when it is on one end of the spectrum, high or low. Here, the attempt is to control volatility as it averages out over the period of your purchase. Dollar cost averaging works very well, as the market is expected to go up over the long run. Further, dollar cost averaging echos the mantra of “it is not timing the market, it is time in the market.” But what about buying the dip?

Buy The Dip

Unlike dollar cost averaging, buy the dip is the purchasing of an asset only after it has dropped in price.  Here, the general belief is that the new low price is a bargain. Therefore, profits will be gained as the asset price increases over time. This strategy is the classic buy low and sell high. 

If you are employing buy the dip, your threshold for the dip is important. If your threshold is a 5% drop in prices, you may potentially miss a 4% drop in price followed by a 10% increase.  A second issue with buy the dip is that you are essentially trying to time the market. Not many are successful at this. In fact, overtime, you are proven to fail. It is really difficult to know when a market has hit the bottom of its fall.

While there are drawbacks with buy the dip, if you do your research and are lucky, buy the dip can be very lucrative. This is especially true in a bull market or a fast recovery following a significant drop in the market. In view of the pandemic drop in 2020 and the recent bull run, no wonder this strategy is so popular.

Buy The Dip And Hold

There is another option besides dollar cost averaging and buying the dip. You may buy the dip and hold. If you have a dollar cost averaging strategy, it may be wise to integrate a mini buy the dip strategy. Meaning, if you invest $500 each month on the 1st of the month, consider having a date range from the 1st to the 5th to invest. In that 5 day period, invest when the market is down. If this strategy is repeated over time, the incremental gains that you may obtain could add up to be of substantial benefit. A half of a percent gain here, a third of a percent gain there for twenty to thirty years. This could be the difference between living on a budget and financial independence.

Money on trees
Money over time

Conclusion

Here, we are not giving financial advice, but this blog provides a great platform to share ideas and discuss experiences. One of the many back and forth that are debated is whether or not to invoke the buy the dip strategy versus the typical dollar cost averaging. But there is an in-between that we should not overlook. If you have a dollar cost averaging strategy, consider integrating a buy the dip and hold strategy.

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Maintaining wealth

Maintaining Wealth: Generational Wealth Part: 2

Money Maroon

Each part of your financial journey is the most difficult part. But typically, even more difficult than accumulating wealth, is maintaining it. There are a lot of articles and podcasts about accumulating and building your net worth, but very little information is provided about maintaining what you have accumulated. But the same principles that will help you to accumulate, will also help you to maintain your riches.

The secret to maintaining your financial position is to perform and maintain the habits that got you where you are today. You must live below your means, save, and invest. Let us dig  into this a bit more.

Maintaining your wealth

Maintain Wealth By Living Below Your Means

If you did the hard work of accumulating the abundance that you enjoy today, and thereafter believe that you have arrived and now begin to live above your means, you will lose what you have accumulated in an instant. To maintain your financial position, continue to live below your means. Imagine having two million dollars and purchasing a million dollar home and a new car.  If you are foolish enough to take the described actions, your financial holdings will immediately take a significant hit. Further, if you also decide to upgrade other areas of your life, it is only a matter of time before you begin to live pay check to pay check. 

Do not fall into the trap of keeping up with the jones. Do not fall prey to the trappings of others. You lived below your means to accumulate what you have, live below your means to maintain and grow your wealth.

Continue To Save

To achieve financial independence, you must save. To maintain your financial independence, saving is also a necessary step. If you are spending all that you make, unexpected expenses will slowly over time eat away your wealth. The fact is, life is unpredictable. A car will break down, your heater will go out, you may lose your job, you may need a new roof. You just never know what will happen next. One thing is certain, life can be expensive. If you have gone through the effort of sacrificing and building wealth, do not blow it. Continue to save and maintain your financial cushion. The goal is not only to accumulate wealth, the goal is to maintain your wealth and enjoy financial freedom.

Grow Wealth By Investing

Saving alone will not bring you to financial independence. You must also invest, in other words, have your money work for you. Having your money work while you sleep is a sure fire way to maintain your financial position. It is important to note that the vehicles that you used to accumulate your wealth can also be used to maintain your riches. But typically, your investing strategy will be changed somewhat. You may not have the appetite to be as risky as you age over time or you may try to ensure that you have a better bet of maintaining rather than loosing it all in the financial markets. In other words, you may not be as aggressive with money in hand once you have achieve financial independence.

Once you accumulate your wealth, do not simply hide your money in the backyard or under the mattress. Do not allow inflation to erode your wealth, have your money continue to grow.

Keep Doing What You Are Doing

The same things that you have done in the accumulation phase is essentially the same things that you will need to do in an effort to maintain your accumulated wealth, but with some strategy changes where needed. Do not be satisfied with accumulating wealth. This is not the goal. Keep in mind that maintaining wealth and enjoying financial freedom until the end of your days on this planet is the goal. Build wealth and maintain it.

Conclusion

Each part of your financial journey is the most difficult part. But typically, even more difficult than accumulating wealth, is maintaining it. There are a lot of articles and podcasts about accumulating and building your net worth, but very little information is provided about maintaining what you have accumulated. But the same principles that will help you to accumulate, will also help you to maintain your riches.

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Generational wealth

Building Generational Wealth: Part 1

Money Maroon

At a certain point, we should take a step back and stop thinking about ourselves, and begin to think about our legacy. We should begin to think and live in such a way so as to build generational wealth. Luckily, if you are living a life with your financial future in mind, building generational wealth does not take much effort. Just keep on doing what you are currently doing. Know that each action you take today is not just for you, it is for those who will come after you. Build a stable foundation and provide a spring board for those who come after.

Generational Wealth Begins With You

No matter how rich or poor you are today, building generational wealth begins with you. If you are wealthy, learning how to grow, maintain and not completely erode your wealth is important. If you are poor, start today to build a stable foundation. Rich or poor, to build generational wealth, you must have something to pass on to the next generation. It takes, saving, investing and reducing your debt. The same concepts relevant to you building wealth, are vital for keeping and passing on wealth.

Increase Your Wealth

When it comes to saving money, the math will never work if your expenses are higher than your income. To reduce expense, consider moving to a smaller home to reduce rent/mortgage, moving closer to work to reduce the cost of commuting, bringing your lunch to work, stop/reduce eating out, cut your cable or other subscription costs. But do not forget the other side of the equation.

To increase wealth, do not only reduce debt, also increase your income. For example, work toward a raise, invest in your education and return to school/learn a skill to get a better position or research a side hustle that may provided additional income? The goal is to increase your income such that your income is higher than your expenses. 

Begin Saving

If you have gotten your income above your expenses, it is time to save. Many fall into the trap of spending their disposable income each month. Do not fall into this trap, remember, your goal is generational wealth, not to simply reduce your expenses and increasing your income. Your goal is to save and grow your wealth. So save your money.

There are a number of tools available that facilitates saving money. For example, you can automate your savings by automatically transferring money from your pay to a savings account or you may save in a high yield savings account that provides higher interest rates than the typical brick and mortar banks. Research the options available to maximize and grow your savings. Further, to consistently save, while it is not required, a budget may provide a financial guide.

Saving Money And Your Future

Now that you are saving, do look towards the future and your financial health. Look to paying off debts, investing, and contributing to your retirement. Saving is only the first step on the path to growing financially and financial independence.

Generational Wealth Is Built On Investing

Generational wealth is built on investing. Investing in your future is an extension of investing in yourself. Once you begin to look to the financial markets, look to learning more about the opportunities that are available to you. Educate yourself.

Retirement

No matter your age, begin thinking about your retirement and related investment options. In thinking about your retirement, you will no doubt hear about traditional IRAs, roth IRAs, SEP, roth 401Ks, 401Ks, 403Bs, 457Bs and TSPs to name a few. Do not simply get lost in the alphabet soup of different retirement plans. Do your due diligence. An investment in your retirement plan education is invaluable to your financial future.

Do Not Give Up Free Money 

If you have access to an employer match, take advantage. Employer 401K match can come in a variety of shapes and sizes. In one instance, the employer will match a portion of your contribution up to a limit. Typically, this limit is represented as a percentage of your salary. In some instances, an employer may match your contribution if you contribute or irrespective of if you contribute.

If your employer provides a 401K match only if you contribute to your 401K, ensure that you are contributing at least up to that threshold. An employer 401K match is free money. Take advantage. Free money will only turbo charge your journey to building generational wealth.

Generational Wealth Is Investing In The Future

Generational Wealth
Generational Wealth

Think about your legacy, your children and their future. To put your kids on the right path and build generational  wealth, think about a 529 plan. By contributing to a 529 plan, you are able to offset some or all costs associated with a college education. In many States, two 529 plans are available, an investment plan or a prepaid plan.

  • The investment plan allows you to contribute by buying and selling shares offered by the State or the State’s agent (similar to investing in the stock market).
  • The prepaid plan is based on the cost of attending a college. Here, you are prepaying the cost of attendance.

While 529 plans are not deductible on your federal tax filings, many States allow you to deduct a set portion of your 529 contribution from your State tax filings. Essentially, your State may be helping you to build generational wealth.

Conclusion

At a certain point, we should take a step back and stop thinking about ourselves, and begin to think about our legacy. We should begin to think and live in such a way so as to build generational wealth. Luckily, if you are living a life with your financial future in mind, building generational wealth does not take much effort. Just keep on doing what you are currently doing. Know that each action you take today is not just for you, it is for those who will come after you. Build a stable foundation and provide a spring board for those who come after.

In part 2, we will discuss how to maintain wealth.

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Father's Day

Have The Father’s Day Money Talk

Money Maroon

For father’s day, instead of falling into the commercialization trend, let’s make our fathers proud. Have a father’s day money talk. This talk will not only impact your father and show him that you are thinking about his future, but will also help you organize yourself to better care for him.  Buying shirts, cards, or tools is a nice gesture. But having a financial chat with dad is impactful. Be impactful on this father’s day and show dad how much you truly care.

The Sacrifice

On this father’s day, remember the financial sacrifices that your father has made over time. Think back to how much your father worked and his pains. Yet, he continued on. While you are at it, it should become very clear why some people stay at jobs that they hate. At times, some people will stay at jobs that they hate in the name of love and responsibility. He did it for you.

Father’s Day And Financial Education

Many have the luck of having a dad that inspires. For some, this is manifested in financial success or the search for financial success based on lessons learned. For example, save, invest, live below your means. It may be in the form of literal education or an education based on observation. Was it his struggle or was it his drive and position as an authoritative figure who did what was best for the family that motivates you to become financially independent? For some, it was the unfortunate mismanagement of finances that provided the teaching lessons that motivates today. Whatever your reason, I am confident that your father contributed and continues to contribute to your reasons for reading a financial independence blog and this article.

While your father may not be your biological father in the context of the man who took care of you, we all have a father, show him that you care.

Father's Day
Happy Father’s Day

Having The Father’s Day Talk

With all that your father has done to influence your financial life, it is time to have a father’s day money talk. Check on his current financial situation and his future plans. Although it may be difficult to talk to family about money, it is important to start.

Previous generations had the now acclaimed three legs to their retirement stool: (1) personal savings, (2) social security and (3) a company pension. Over the years, the three legs have been significantly weakened.

First, many have very little to no personal savings; second, as it currently stands, the social security program is teetering on the edge of insolvency; and  third, for the most part, company pensions are a thing of the past. Taken together, the baby boomer generation have little saved for retirement, no pension plan and are dependent on social security. This is the reason for the talk.

The Talk

To have the money talk with dad, there is no reason to be aggressive. Do not forget that it is father’s day. If you approach your father’s finances aggressively, your father is likely to get defensive. The point here is to begin a conversation or continue the conversation such that you know where your dad is financially. More importantly, these conversations will aid your financial planing.

We cannot control what another person does, especially our parents. However, if we can make them aware of potential issues that may be on the horizon, maybe they can and will take action to change course. 

The fact is, you as the child may be responsible for your parents during retirement. It is important that you begin taking steps to mitigate the impact on your financial future by talking to your dad this father’s day. 

The Best Father’s Day Gift

For most of us, as adults, it becomes a struggle to get the perfect gift for dad. Guess what, you have most likely provided a lot of his material wants over the years. There are only so may cruises, trips, tools, shirt or gadgets that you can gift dad. At this point, the best father’s day gift may be just showing that you care by having an important conversation. Instead of gifting something that will be used for only a day or a month, have an impactful financial conversation.

Conclusion

For father’s day, instead of falling into the commercialization trend, let’s make our fathers proud. Have a father’s day money talk with dad. This talk will not only impact your father and show him that you are thinking about his future, but will also help you organize yourself to better care for him.  Buying shirts, cards, or tools is a nice gesture. But having a financial chat with dad is impactful. Be impactful on this father’s day and show dad how much you truly care.

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Amazon prime day

On Amazon Prime Day, Ask These Three Questions

Money Maroon

It is back. Yes, it is that time of the year again, it is amazon prime day. The annual two day deal event that is exclusively for prime members. But before you hit the checkout button and reach into your wallet or bag for your credit card, ask yourself the following three questions. Do I really need this item? Can I afford it? How many days will I have to work to pay for this item. Do not buy just to buy, be intentional and logical with your purchases. It is your hard earned money after all. 

Amazon prime day
On amazon prime day, think before you spend

Do I Really Need This Item

So often we buy items because we think we need it. But do we really understand what is a need versus a want? Generally, a need is something that is a necessity or essentially required for life. For example, food, water, and shelter are needs. In some instances, the list can be much broader depending on your specific situation. But if you are hoping to take advantage of an amazon prime day deal, it is likely that the item you are planing to buy is in the category of a want. 

A want is something unnecessary but desired. For example, while you may need a car, do you need a luxury car? We all need shelter, but do you need the home that is at the top of your budget? Do you really need the new fancy gadget for your grill or your car? The answer is no. It is not a need, just a want. What is actually interesting is that a lot of times, we may desire an item, but once we have that item, we will rarely use that item.

Many factors contribute to your wants. Did you fall victim to a commercial or was it something you saw in your neighbor’s yard? Your want for an item may also be a matter of the fear of missing out. The fear of missing out will at times push us to buy when we need not do so. Before pulling the trigger on a purchase, remember not to buy just because something is on sale. Assess whether or not the item is a need. Does it make sense? For all you know, next week, the special sale that appears on amazon prime day will be back. Do not allow a manufacture sense of scarcity and pressure force you to make a purchase.

Can I Afford Amazon Prime Day

When thinking about taking advantage of amazon prime day, always ask the question of can I afford it. No matter what the sale prize is or the discount percentage, ensure that you can afford it. Being able to afford something is very different from being able to purchase the item. You can use credit to purchase just about anything. But can you actually afford what you are buying.

Do not be tempted to put something on a credit card that you cannot afford. You do not want to have an amazon prime day purchase made this year that is not paid in full next amazon prime day. Credit cards are expensive. Take a look at your interest rate. Ensure that if you make a purchase on credit, you are able to pay it off in full without having to pay interest.

Can you afford your next purchase? Be honest with yourself. If the answer is no, know that it is ok. Because there is a sale does not mean that you have to buy. Keep your financial future in mind.

How Many Days Will I Have To Work To Pay For Amazon Prime Day

It is a question that is rarely asked but should be asked before every major purchase, especially on amazon prime day. The question is, how many days will I need to work to pay for this item? For example, if the item costs $500, and you are paid $30 an hour, it will take you 16 hours of work to pay off the item, two days of work. If you are making significantly less than $30 an hour, you may have to work for over a week to pay for the item. Now consider if the item or items total over $500, it may take you a lot longer than a week.

Now, is this item that you are thinking of purchasing worth a week of work? Is it worth it? If the item is a need, then it likely is. However, if you are about to purchase a want, take into account the costs. With regard to costs, consider not only the money, but also your time.

Before you consider making a purchase on amazon prime day, ensure that you are not succumbing to a manufacture sense of scarcity and pressure.

Amazon prime day
On amazon prime day, don’t forget that it’s your money

Conclusion

Amazon prime day is here again. The annual two day deal event that is exclusively for prime members. Before you hit the checkout button and reach into your wallet or bag for your credit card, ask yourself the following three questions. Do I really need this item? Can I afford it? How many days will I have to work to pay for this item. Do not buy just to buy, be intentional and logical with your purchases. After all, it is your hard earned money. 

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Summer time

Summer Time Is Money Time

Money Maroon

It is summer time again. While this time of the year is not packed with costly holidays where you risk over spending to impress another with presents, be careful. Summer can easily become a time of the year where you overspend. Summer is the time for grilling, summer vacations and out door activities. In a year of pent up demand for leaving home, the costs of this year’s summer time activities can add up very fast. Stay focus and keep your financial goals in view.

Vaccines And Summer

With covid19, the summer of 2020 was unlike any other. For the most part, we all stayed in and only mingled with those in our household. Not a lot of traveling, and not a lot of vacations. Lots of unintentional savings were made in 2020 as we spent significant time with our immediate families. For some, financial plans were derailed because of loss jobs. However, this year is a bit different when compared to last year. With the roll out of covid19 vaccines, we are moving closer and closer to normal. Mask mandates are relaxed and traveling is picking up.

As we return to normal, so will our spending. Our overspending will also likely return to  normal or accelerate. With more to spend and the deviation from the norm that was 2020, it is only natural for us to want to get back out there and enjoy this summer. But this can get very costly.

Sumer, put your feet up
Summer Time – Money Time

Cost Of Summer

If you are planning to travel, I would encourage you to take a look at airline fares and plan ahead. Travel related prices have increased significantly. While the airline industry lost  billions last year, you better believe that they are looking to profit this year. Further, with increased demand, it is likely that your travel costs will be significantly more expensive than years prior.

Hotels, are operating similarly to airlines. This year, there will be increase demand compare to 2020. Many families will try to hit the road and get out and away from home.  Overall, supply may be lower because of those business who have gone out of business due to covid19, but demand will significantly increase over last year. As supplies decrease and demand increase, prices will also increase. Further, take into account that hotels will try to make up for last year’s short fall and you will be paying a heavy price.

Now, if you are not traveling and want to stay home, the cost of meats for grilling has increased, the price of gas has increased. Again, because a number of business went out of business because of covid19, the supply chain has been disrupted. Again, the law of supply and demand means as we go back to normal, prices will rise as demand rises.

Save This Summer

You have survived covid19 and for the lucky ones, you have saved if you were able to keep employment. As we return to normal, do not forget your financial goals. While your financial goals may have been derailed or accelerated in view of the covid 19 pandemic, do not lose focus. Your actions today will be amplified tomorrow. The financial decisions you make today will affect your finical life in the future. Take steps today to rein in your spending and continue on a journey to financial independence.

If you were able to save during 2020, save during 2021. Do not stop. Maintain or increase your saving/investing rate. Know that  you are in control and if you were able to do it in 2020, you can do it in 2021. You are in control.

Conclusion

It is summer time again. While this time of the year is not packed with costly holidays where you risk over spending to impress another with presents, be careful. Summer can easily become a time of the year where you overspend. Summer is the time for grilling, summer vacations and out door activities. In a year of pent up demand for leaving home, the costs of this year’s summer time activities can add up very fast. Stay focus and keep your financial goals in view.

Life is what you make it. If you were able to take the steps to survive covid19, this summer, take the steps to secure your financial future and achieve financial independence.

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