Lesson 1-5: Importance of Financial Planning
Attempt: 9
Result of Not Planning Your Finances
Failing to plan can be devastating even for those that makes lots of money. Professional athletes and lottery winners are prime examples. Most professional athletes enter the professional sports arena in their early 20s. This is an age where most people are still in college or are just starting to look for work. Planning for this age group is not a top priority. In addition, the amounts of money involved can be substantial by almost anyone`s standards.
However, pro athletes will often face financial troubles within 5 years of retirement:
o 78% of NFL players (Average yearly Salary $1.9 million)
o 60% of NBA players (Average yearly salary $5.15 millions)
For more reading on the perils of not planning as a
pro athlete read "How to Lose $20
million: The Sudden Wealth Problems of Pro Athletes"
Similar to pro athletes, lottery winners get their wealth very suddenly and in large amount. These lottery winners are generally not prepared to deal with all of the issues that come with getting large sums of money in a very short time. In addition, they have little time to plan on how to best manage the money before they dive headlong into spending the money.
It is estimated that 90% of lottery winners spend all of their winnings within 5 years. Lottery winners often spend extravagantly on luxuries that before they could only dream about. They also will give expensive gifts and money to family and friends. There are many reasons for these astounding numbers including a lack of financial knowledge, over spending, and poor judgment.
For more reading on lottery winners boom to bust lives go to "The Tragic
Stories of Lottery`s Unluckiest Winners"