SUDDEN WEALTH

There is one common theme among people who receive large sums of money in a short amount of time. They most often lose all of it almost as fast as they got it.

Think of people who win the lottery. History shows us that many of them declare bankruptcy within 5 years.

Why is it that someone can be given more money than they would have earned in their lifetime but then lose it all?

It's because they are still the same people they were the day before all those riches fell into their lap. They have the same flaws, the same strengths, and the same habits. Just because they now have money does not mean that their character has improved. Character is not magically improved by money, it is simply more easily seen because money magnifies a persons character.

If they didn’t have a healthy knowledge of how to properly handle money before they became rich, they will only have their poor money relationship enlarged. The consequences of which can lead to the destruction of everything around them.

Dave Edwards — a former drug addict and felon — won a $27 million jackpot in 2001 while unemployed in South Florida.

He quickly blew through the money by purchasing a $1.6 million house in Palm Beach Gardens, three racehorses, a fiber optics company, a Lear Jet, a limo business, a $200,000 Lamborghini Diablo and a multitude of other luxuries.Edwards and his wife returned to drug use and had numerous run-ins with police for possession of crack cocaine, pills, and heroin.

He lost all of his money in just a few years and ended up living in a storage unit surrounded by human feces.

This story is just one of thousands. Why do people go broke when they get so much?

Far too many people only think of the actual money, but there is a much greater thing to acquire – the money mindset.

One of the important rules of wealth known to those who have the correct money mindset is that they know riches do not equal wealth. They do not go out and buy a new Lambo because they have the money for it, but because they have their wealth earning them riches. If their wealth earns enough to buy a Lambo, and that is what they want, it is perfectly fine for them to go out and buy it.

The key difference is that a rich person is one who just has money and a wealthy person is one who has money producing assets.

The rich person with the Lambo just became instantly poorer with no way to regain that money, while the wealthy person with the new Lambo will see their riches increase again in time.

CRYPTO RICH

The new “crypto-rich” have only seen rapidly increasing gains for the past year. When an asset class continues to hit new high after new high, with only short pullbacks, the investor can think that everything they touch turns to gold.

It is riches without work. Money without meaning.

Gandhi said there were seven deadly sins, and that is one of them. Becoming rich without adding value to society goes against the natural law of things. Becoming rich without the hard work and failure that is often in the way of obtaining money. People suddenly granted riches often have a dysfunctional relationship with money.

They have:

• Inability to delay gratification
• Inability to tolerate frustration
• Low self-esteem
• Lack of identity
• Social and emotional isolation
• Unrealistic expectations
• False sense of entitlement
• Depression

Like Dave, the lottery winner, they overspend with no concern about the future. They use the money as power to control others. If they bought everything they saw on a TV shopping network before they became rich, they will continue to do so – magnified 1000X.

LEARN THE SKILLS

We all are a product of a lifetime of experiences that no amount of money can buy. Those that truly deserve to be wealthy have survived and prospered not because the money came easy, but because it came hard. They experienced many failures and rose up to the challenge to become successful.

Those granted wealth, those that never had a challenge or a setback, never learned the skills and abilities that allow them to remain wealthy. This is why money hardly ever lasts to the third generation.

The Grandfather made it. The son spends it. Nothing makes it to the grandkids.

The son received the money without the character traits necessary to keep it.

Fortunately, the traits can be learned. If you have become rich off of crypto (or just won the lottery), you need to make learning the proper money mindset of the wealthy a priority.

The first book you should read is “Your Money or Your Life” by Vicki Robin and Joe Dominguez as the ideas presented lay a healthy foundation towards money.

The second book is “The Millionaire Next Door" by Thomas Stanley and William Danko. It will teach you why you need to create a wealth stream and only use that money to buy things. Never spend the principal.

The third book is “Rich Dad, Poor Dad” by Robert Kiyosaki. This book, though light on details, will show you why it is important to build up a passive income empire while getting you excited about the possibilities.

But remember, although money can buy a library of books, it can't buy brains nor the discipline to follow through. Those things have to come from within.