Even if you hit the jackpot, there is no magic solution to fix your finances. Having money doesn’t mean you know how to manage it.
As a newlywed who had just finished college, I looked at my finances and despaired. Credit card debt. Student loans. No job yet. I fantasized about how just the “right” amount of money would fix my finances quickly and easily and result in financial freedom.
All I needed was $100,000. Really, that’s not much. But $100,000, in my mind, was a magic number. It would pay off the credit cards, the student loans, allow us to buy a new car, and put a down payment on a house. Perfect!
I see this all the time, though. “Once such and such happens, everything will be fine.” Such-and-such might be a new job, a promotion, winning the lottery, or making a certain amount of money each year. Unfortunately, even if you hit the jackpot, there is no truly magical solution to your finances.
You Can’t Rely on Outside Forces to Fix Your Finances
One of the main pitfalls here is the reliance on outside forces. When you think that something will happen to bring you out of your financial doldrums, you are essentially abdicating your power to earn more money and putting someone else in control of your financial destiny. What happens if that promotion doesn’t come? What happens if the amazing number of sales you’ve been hinging your future financial security on never materializes? What if great-aunt Edna doesn’t leave you a huge inheritance? What if you don’t win the lottery?
Waiting for that magic moment, when everything is just fine, can leave you waiting for a looooong time. And you won’t be making any financial progress because you’ll be sitting around, wishing things were better and saying, “If this would just happen.”
Even a Windfall Can’t Fix Your Underlying Money Management Problems
What if you do get a windfall, though? Unfortunately, the fact that you just got dumped on by a truckload of cash isn’t a magic solution, either. The money management issues you had before you discovered that your grandfather left you as the sole beneficiary of his life insurance policy will continue. If you don’t know how money works and haven’t been living within your means, chances are that you’ll be broke soon.
We’ve all read the stories of how lottery winners go broke. They win a huge jackpot, and it’s supposed to change their lives. And, for a while, it does. They buy cars and houses. They live lavishly. However, they go through the money rather quickly without solid financial habits to fall back on. Pretty soon, they’re back to square one.
Just because you have money doesn’t mean you know how to manage it effectively. The bottom line is that you need to be in control of your financial destiny. Look for opportunities to earn more money. Develop your skills and yourself. Start a side hustle. Learn the principles of sound money management. Live within your means, and do what you can to get rid of debt. Once you know how to manage money, you don’t need a magic solution to improve your financial situation.
Image source: …trialsanderrors via Wikimedia Commons