There is always the case of M.C. Hammer and how he lost his fortune due to terrible mismanagement.
Now you'll wonder why I am writing about this, after all I haven't made millions yet....Yet!
It's actually a very important reason as to why.
You hear all the time about people who make it big, and then no sooner than they are rich beyond their wildest dreams, they are back in the poor house. Why is that? I call it Epic Wealth Foolery. It can happen to anyone and everyone regardless of how they made their fortune. It strikes the same to a lottery winner as it does to a rap artist.
The thing that you have to consider is that when wealth strikes someone who isn't used to it, their brains change. They honestly think that their wildest dreams have come true, and to some extent it has. Every options that they have ever wanted, every place they have ever wanted to visit, and everything they have ever wanted to do, is now available.
It's a beautiful opportunity, but it is fraught with problems.
Let's talk about some of these problems and possible solutions.
- Taxes/Debt
One of the first thing an individual should do when receiving any money, is find out how much they owe in taxes, and any fees associated with that, and any other monetary amounts that might need to be paid. It seems like a pain, but in the end it's worth it. I remember a situation some years back when a family member thought they had paid the taxes on something, but they had only paid the fees, which were quite substantial. This same thing applies to debt. While you have the money, get it out of the way. You'll be better off when they are not taking on interest and not trying to take you to court to get more of your money.
- Friends
There are two types of friends. Those that (A: support you and help you, and (B: those that come out of nowhere, didn't support you and only have their hands out. The B) types are the ones you want to avoid. They'll always want something from you, and always expect something from you. Most of the time those that are close to you won't need anything from you. Avoid the B types.
- Family
Just like with friends, family will often come in A and B types, and you will naturally want to avoid the B types. Naturally you will want to do for your family, but just consider this. If they were there for you when you needed them, they really wouldn't need to come around.
- Shady Opportunities
When you have money at your disposal, the shady opportunities will start to appear. Hey cuz, I just need some money to make my first record, I'll let you be my producer/manager/agent. Ey' homie, I got this great idea for a waffle maker that bakes in chicken. I call it Chicken in Waffles. (tm). People will naturally assume that you are a stupid moron. No matter how much they try to make it sound like a great deal, chances are it isn't. If it was so great, why aren't they making money from it? If they claim it's because they needed someone to help fund it. Ask to see a business plan and then talk it over with someone qualified. Don't be a sucker for a sweet opportunity that can be very souring.
- People generally ripping you off.
This one goes along with shady opportunities. When you have more money than you know what to do with, you will always find someone willing to sell you something or offering something. they will appear to be legitimate business people, but buyer beware. Con-men and snake oil sales man often look as normal as any as your kindly next door neighbor. Never be afraid to ask question. Never be afraid to ask for proof. If they can't provide it, then you need to question the person who you are dealing with. Any professional anything worth their salt has the ability to back up any claims. If they are an agent, make sure you can see what they have done. Real estate? Ask to see their license. Always protect yourself and if it sounds too good to be true it probably is.
- Eyes bigger than wallet
This has less to do with others, and more to do with yourself. Once you've made it to the Bigtime, you are going to want to buy things. It's inevitable, after all what is the point of having money if you can't use it. You're going to want what ever it is that you have always wanted. You are entitled to it, but don't let your desire for nice things drain your money faster than you can save it. We all want things and when we get the money we should have them, but do you need that mansion when a nice house with a paid for mortgage will do? Do you need a fleet of expensive cars when maybe one moderately expensive car and a few regular price cars will suffice? Do you need all that expensive jewelry? I'm not saying you shouldn't do anything for yourself, but I will say that you should always be reasonable and not go over board. Remember the saying. Money; easy come, easy go.
- Lack of good investing/saving strategy
The thing about money, is that while it may be here today, without sound planning and preparation it can be gone tomorrow. The problem is, that most people are so willing to blow it. Good old fashioned common sense is usually lacking in this area, and it shouldn't be. You wouldn't hand just anyone your wallet and expect them not to abuse what was inside of it. No of course not. The best thing I can advise is this.
Talk to someone who doesn't know your improved financial situation and ask them about good investments.
Talk to your banker, about savings and things that will net you a return on investment. These are two things that can be done that might extend your money. Always listen, ask questions and take notes. Don't sign anything until you know what it does and what means.
Don't make the mistake of wasting an opportunity to live well, because you let the wrong people into your life, wasted money at the strip club trying to be a baller, buying cars and jewelry and trying to take care of every member of your family. Be smart and careful and your money can go a long way. Hell, even if you don't have millions of dollars, smart planning and wise decision making can still take your further.
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