by Bhaj Townsend
There are so many stories of sports figures, politicians, and IPO victors who went from barely getting by to amassing fortunes. I think of Roger Federer, the winner of 17 Grand Slams in tennis, who renewed his contract with Nike for life, former President Clinton, who purportedly made $35,000 a year while governor of Arkansas and has made over $100,000,000 since he left the White House and Steve Jobs who amassed his fortune with Apple. None of these people came from homes that were accustomed to having a lot of money. Suddenly they had money…a lot of it and so did their families.
What happens to money for those who mass it quickly? For the most part it is gone due to spending. Mint.Com reports that 25% of MLB, 60% of NBA and 78% of NFL players file for bankruptcy within five years of retiring. These are people with professional advisors and handlers. These new money earners still go through their money like it will always be there.
The same happens to those who inherit fortunes. Research has shown that 70% of families lose their wealth by the end of the second generation (your children’s generation) and 90% lose their wealth by the end of the third generation (your grandchildren’s generation). There are those who inherited fortunes and lost them; people like Barbara Hutton, heir to not one but two fortunes, her father’s investment house and her mother’s claim to the Pillsbury estate; Anthony Marshall who went to jail at age 89 for stealing millions, Brooke Astor and heirs to the Vanderbilt fortune, not a single millionaire by the fourth generation.
Is wasting the money to be expected? It is, when money is viewed an entitlement. It is easier to keep the money in the family when money is taken as a responsibility.
How can you support responsibility and restrict entitlement? I have found three elements to consider. The first is: Begin early. Learn the 5 S.I.D.E.S. © of money (spend, invest, donate, earn and save) and direct that money to those 5 S.I.D.E.S. © while young so you can forge strong and personally supported habits early. The second is: Conscientiously rewire your brain so that it incorporates these five “sides” into your daily life. This will take time. It may even include some missteps. That’s okay. Just doing it will reap great rewards. Third: you have to prioritize these 5 “sides” for the purpose of limiting yourself in “sides” you know you may want to over indulge.
Tell me how does money work for you in your life. Do you use the 5 S.I.D.E.S. © of money blueprint to guide you? If so, how? If not, why not.