Why Get Rich Quick Does not Last?
David Ghele, a lawnmower in USA, won a lottery of $365 million, making him rich overnight (a very apt get rich quick case study). He spent all his money in fancy cars, travelling and other assets, ultimately broke, he went back to his old job of lawn mowing in Nebraska.
Michelle Heimburger, amassed wealth betting on stock options in no time. She spent her entire wealth in buying and renovating a haunted castle.
The renovation cost her a fortune, not to forget the extravagant parties she threw in that castle, attended by hundreds of guests.
All was great until Michelle ran out of money and had to sell the castle and go back to her job as a writer, editor and illustrator.
These are some of the examples of people who managed to get rich quick but also lost it all within no time. A research shows that almost 70% of the people who amassed wealth overnight, went broke again.
Ever wondered why it happens? Why fortunes amassed overnight are lost in no time, while those who earned it slowly, over the years have been able to sustain it?
The secret lies in the way we behave versus the principle of money. In this post we are going to understand the reason behind why people who gain massive wealth are usually unable to sustain it.
Because it’s effortless money:
The above quote by Warren Buffett sums up the entire point. Whether it’s money or anything else, when it comes easy, we take it for granted, and it starts losing its value.
Those who get rich quick get tons of money for no efforts made, and thus, do not respect the money.
Thinking no matter how much they spend, the money is going to last forever, they keep spending without paying attention.By the time the reality hits them, it’s too late to fix things.
On the other hand, those who make money the hard way, understand the pain they went through to get what they have achieved, and thus become vigilant to where the money goes.
The entire difference lies in how careful you are about your finances. If you don’t count your pennies, soon you will be penniless.
Lack of Financial Discipline:
The second reason is the lack of financial discipline. The usual and boring way to get rich quick (not very, to be honest) is to save and invest wisely. But when there is so much money waiting to be spent, who thinks about saving?
Money is like flowing river. If the source does not get replenished, soon the river will dry out.
Most people who get rich quick, do not realize the fact that no matter how much money they have, it will not stay longer if you do not have a source of cash flow.
No matter how rich you are, it is the financial discipline of saving and investing that will ultimately keep you rich.
Desires Take over Needs:
Most people confuse their desires with their needs. Desire is what you want to have, needs are what you should have. While a decent car and a modest house can do good for us, we all desire for a fancy car and a huge mansion.
Desires have no end or limit, but needs do. As Warren Buffett says “If you spend on things you don’t want, soon you will have to sell things you need”
People who gather wealth by hard work understand the difference between what they want and what is needed and always prioritize needs over wants.
Smart allocation of money is the secret to making a fortune. Unfortunately, people who get rich quick neither have the knowledge nor discipline to understand and practice this.
Humans are social animals, and a lot of our life decisions depend on other people’s opinions. People believe you are rich only when you look rich. This is the reason why those who amassed wealth in short period of time want to show off, confirming they are affluent.
On the other hand, those who become rich the hard way, have no interest in such show of wealth as they are too focused on their ideas, not paying much attention to how they look. They value their knowledge more than the possessions.
It is true that we all love to get rich quick. But such wealth is not going to last long solely because you will not be psychologically ready for it.
When you work towards amassing wealth instead of simply getting or inheriting it from someone, the process itself psychologically prepares you.
You understand the pain you went through to reach there and value the money.
This is the reason why people with self made fortune are able to stay rich for longer than those who get it effortlessly.