10.6.14

From Millionaire to Pauper in less than 2 Years

If you have read the heart-wrenching news, about how a widow got donations & insurance payouts worth S$1million and then squandered it all in just 1 YEAR; you would be utterly disappointed in her.


"I also don't know how I finished (using) the money," she said.


Furthermore, she has 5 kids to look after and now that she's broke, she has to turn back to working a low wage job again.

While you may feel sad for her and the circumstances she fell into, perhaps a few of you will think of why; Why does this happen?!

"how the h*ck can you spend all that in a year!?!?"

More often than not, people who come by large sums of money, whether be it through inheritance, striking lottery, sportsmen who suddenly get rich etc. are set to lose it back all again. (Look at michael jackson, mike tyson). 

Why? This is because of one simple reason - Lack of Financial IQ. If one is not prepared for a financial windfall, the money disappears quickly, with some even reaching a financial position that is worse than before they received the windfall. Some even go to the extent of being bankrupt.

Qn: So How Should You increase your financial IQ?

Ans: Through 3 words.
1) Read - It's just like studying to pass your basic driving theory test. You need to understand the terminologies and how stuff works before actually working on it. Reading up on personal finance can be easy; you can just borrow the library books for FREE so what's stopping you?

2) Invest - After getting basic financial knowledge, it's important to take action (like learning driving lessons to get more confidence before taking the test). Many people are afraid to invest their hard-earned money because they are scared to lose it all. However, when you leave your money in the savings account, you are potentially losing out even more than those who make mistakes but improve on them along the way.

3) Assets - While i may not agree 100% with Robert Kiyosaki on his many philosophies, I do advocate the idea of accumulating assets. As he has always mentioned in his books, Assets can put money in your pocket and make you richer while Liabilities take $ out and make you poorer.

Conclusion

In my own conjecture, i believe there are still many more out there that lack the necessary financial wisdom to secure their own comfortable retirement next time. I have the dream to help as many as I can and hope that I can reach out to them one way or another; taking on the late Dennis Ng's dreams to build a foundation with the donations of people who benefitted from the knowledge i shared.

9 comments:

  1. The news has went viral but I think such sudden windfall has clouded her "relationship" with money and made the wrong decisions with her spending/investing.. I am sure she is not the only case out there...

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