Keith has finally hit the jackpot! He has won one hundred million shillings in the lottery. His dream has finally come. He is rich beyond his wildest imagination. He can finally live the life he has always dreamed off. His first course of business is to quit his job. He then proceeds to buy his dream car for ten million shillings. He moves out of his one bedroomed flat and goes and rents a five bedroomed house. This costs him about three hundred and fifty shillings per month and he furnishes it lavishly. He gives his relatives some money. Then he truly lives the life. Days spent in expensive restaurants and hotels. Frequent evenings out where he generously pays bills for the people around him (he seems to have acquired more friends). He takes copious amounts of holidays and now has the opportunity to travel first class. He throws parties. The bank account starts diminishing. He can see it coming but avoids it. As it gets closer to the end he is in complete denial and even starts borrowing to maintain this lifestyle.
Two years later, Keith is broke. He has been kicked out of his house for defaulting on rent. He is no longer allowed into certain establishments because of the bills that are still unpaid. He can no longer afford to maintain his car and has to sell it at a throw away price because he is desperate for the cash. The friends have disappeared. Keith is worse than he was before he won the money. We see stories like Keith’s all the time. Just do a search on the internet and you will find many Keith’s. We are already reading about those who have won local lotteries/competitions and how they are spending money. Sometimes this situation is found with athletes. Millions of dollars won but it ends up in the same cycle. A lot of quick money that never translates to sustainable wealth yet the amount received was more than enough to do this. Why?
Money does not create character. The person who has acquired wealth over time has developed vision, discipline, values, integrity, patience etc. They have also understood and appreciated the importance of delayed gratification. That is why they are wealthy. If you gave them the same one hundred million, they would not treat it the way Keith has. In all likelihood they would know what to do with it to make it two hundred million. Keith unfortunately has not gone through that process and has not adopted the right mindset on wealth. The same way he was treating ten thousand shillings is the same way he will treat greater amounts. Even prior to winning, he probably didn’t invest or save, he spent money without thinking about it, didn’t manage the salary he was earning properly etc. His windfall just gives him the ability to do this on a bigger scale.
Many of the same reasons that people gamble are the exact same reasons they are not able keep the money. If you don’t have the ability to delay consumption with small amounts of money, imagine what a lot of money will do? At first it will feel like you can afford everything. Because of lack of appreciation for the value of money, you will overestimate what it can actually do. No matter how much money you think you have, the world has more than enough things to buy. The world will never run out of places for you to spend money (Click to Tweet this thought) on if that is your intention. If Keith paid attention to this, he may have realised that some of the things he was doing are done by people who have twenty times the amount of money he has. That is why it was always going to be unsustainable.
Quick money has the ability to create a false sense of identity. You suddenly believe you are important because of the money and being perceived a certain way. That is why it is so common amongst quick winners, that “friends” show up. In Keith’s case, they were obviously using this opportunity to live well on him. In the process they must have been stroking his ego in some way. Because of the attention he received from them and other people he probably felt important in a way that he has never felt. Unfortunately, in our society you will be given that temporary attention (which is sometimes confused for respect) when you have money and people perceive that you can do something for them. It feels good at the time. In order for Keith to keep feeling good, and buying this attention, he had to keep spending, and when the money run out he borrowed. We are not (intrinsically as a human beings) the amount of money we have or perceived to have. It is very natural to get excited over the money. All of us would face the same thing. Keith should have tried to keep himself grounded and do the things that keep him grounded. Kept his day job at least until he has a plan. Kept his old friends. Some of them may have been able to beat some sense into him. On a practical level, he should have put the money in a place where he couldn’t easily access it until he calmed down and got help putting a financial plan together. The unfortunate thing with many of these cases is that even if they had just left it in a basic fixed deposit account, they would have comfortably been able to live off the interest. In Keith’s case he would be earning at least seven million shillings a year. Even if he was in-disciplined with that, he would still be guaranteed of another seven million shillings the following year and the next and the next. It’s one thing to make money and another different challenge to keep it (Click to Tweet this thought).
Waceke runs a Personal Finance & Wealth Creation program at Centonomy. For details email her on waceken@centonomy.com | Facebook/WacekeNduati| Twitter@cekenduati
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