Most people who win the lottery are actually happy. Contrary to popular belief, most lottery winners don’t end up bankrupt and miserable. Instead, they settle into a quiet, comfortable life of anonymity.
Various studies have found that winning the lottery does buy happiness, and most lottery winners improve their lives with their windfall.1Source: Slate
What does this mean for most of us who will never win the lottery (especially those who don’t even bother to buy a ticket)?
An interesting thing about these happy lottery winners: They continued working after their win.2Source: Research Gate
Sure, they might buy a bigger house, a better car, and take a long, expensive vacation abroad. Maybe buy their loved ones a few luxury items. But after all that is done, they eventually get back to doing something a bit more routine: Like doing work they enjoy.
That’s one thing I also learned when my net worth started to increase substantially.
Having money simply gives you more options and freedom. You’ll eventually need to do something with those additional options and freedom.
To me, that’s writing, managing my businesses, working out, and being surrounded by people I love.
The money itself didn’t bring me happiness. It’s the activities I chose to spend it on that did.
I think that’s what made some lottery winners unhappy. They spend their money on things that don’t bring them genuine joy in the first place. Like gambling, hard drugs, and too many luxury items.
When you think about it, even without winning the lottery, spending your money on those things will really make you miserable.
You might get a financial windfall…And then what?
While most of us will never win the lottery, I believe we all experience receiving relatively larger amounts at some point in our lives.
- Getting a large cash bonus from work
- Working for a major corporation that offers a really high salary package
- Closing a big deal that comes with a large commission or profit
- Having a sudden surge in sales because of external factors. Like those face mask manufacturers and digital product sellers who had an influx of sales during the pandemic lockdowns.
- Winning a skill-based contest like a short story or graphic design competition, film award, etc.
- Or owning an individual stock that skyrockets in value. For example, if you invested $1,000 in the liquefied natural gas company, Cheniere Energy (LNG), at the end of March 2020; you would have $4,459 (a 445.9% increase) by the middle of October 2022.3Source: Yahoo! Finance
These things can happen. And if you give yourself enough time, one or more of them might eventually happen to you.
In these situations, we can take a lesson from successful lottery winners. Researchers studied the lives of over 3,300 Swedish lottery winners within a 5-22 year period after their win. And concluded this:4Source: Time
“What we see consistently is that they work a little bit less, but they spend the money quite intelligently. But that’s not to say that nobody has wrestled with self-control problems and using the money in ways that are not conducive to their best interest. But, I think that their behavior is a lot more governed than you might believe.”
In the end, the key to being happy with a lot of money is having self-control.
Manage your emotions first
When we suddenly receive a windfall, whether that’s through luck or our own hard work, we can be tempted to spend it at once.
First, you want to avoid the itch that people usually have in the presence of money: Greed. People who receive a lot of money are often tempted to increase their windfall even more. This happens to investors who suddenly find their stock picks skyrocket. Or business owners/freelancers who get an influx of sales.
People blinded by greed may fall for money-making scams. Or they might subscribe to the hot hand fallacy; a biased way of thinking that believes a previous success will keep continuing.
It’s great if extra money keeps coming our way. But don’t expect it to do so just because it happened a few times.
The second thing to do is to not do anything.
When folks receive a windfall, their emotions tend to be high. That’s just natural. But being emotional with your money often leads to financial ruin. So try not to do anything with your money until your emotions have subsided.
Windfalls don’t last forever
In statistics, researchers often look at existing birthrates to make an intelligent guess about the future population. This process is called “extrapolation,” or the act of estimating future numbers using data from past trends.
Extrapolation works well in various fields of study, like physics and demography. But when it comes to money and the economy, it’s not very reliable.
The past condition of our finances does not predict future results.
That means getting a major client or receiving a large bonus doesn’t mean we’ll get it again soon. A big surge in sales won’t last. And the stock you bought now that went up won’t always go up.
This works both ways: Having a lot of money today doesn’t mean money will always come to you. But if your financial situation is bad right now — that also won’t last forever.
That’s the key thing to remember when you get a windfall, whether you win the lottery or not: Nothing lasts forever.
The best thing we can do? Focus on what matters to us. Just like how the lottery winners continued to do work they enjoyed even after becoming multi-millionaires.
Having a lot of money must never be our end goal.
