Why is it people who always had money stay rich but people with new money waste it all (lotto winners)?

[jennifer_bloom]

I read over 98% of draw winners spend it all in 5 years. I think it might be because newly rich people use money to buy friends. My friends who wore born rich ate crazy diets, did crazy exercises, worked part time jobs while studying, and stayed up to 4 in the morning planning social activities for charities, they had every intention of earning their lifestyle.

[razelove]

Paycheck to paycheck mentality. You get used to living within your means, regardless of what they are. It's just that if you have a job that pays over 100k a year, generally your means, and paycheck will have a matching retirement fund, insurance is taken care of at least 90%, you may have some options to put your kids in school for cheaper, or lower interest rate loans, also ways to diversify your retirement or investments with your direct deposit.

Anyway, if you win the lottery and take the one time payout instead of a 10-20 year payoff, that's one big check, but no insurance, retirement, or anything is planned out. As you spend that money like water you think there will be more, but the lottery isn't a job (it can be though) you get paid from it once, and then it's gone.

People who have always had money are that way because their income is stable, none of them have had a lump pay out and then got cut off. Like even business owners, drug, or arms dealers aren't going to stake their entire life on "one big score" then call it quits.

[ilovelamp]

An average person who increases their wealth over time, is likely to maintain that wealth. Since they learn what to do with money gradually, how to properly manage and use it.
Most of those who come into massive amounts of wealth suddenly are completely ignorant on how to use or manage it. It gets wasted on drugs, alcohol, hookers, fancy cars, Real Estate with plenty of hidden price tags they know absolutely nothing about, Taxes and other cash grabs, Fear, and much more.
It really is like dropping a child in a highly skilled or difficult profession, telling them to recreate the mona lisa but as a sculpture at an a expert level. And if they can't make that they're fired and exiled.

[ilovelamp]

As for people who are "always rich" (ie, born into wealth) that's generational wealth that gets passed down. And if the parents are good they teach them what they learnt about money, how to manage and maintain it.

[Legendarylegacy13]

Because, they aren't use to being rich.