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I don't know if he still does it, but many years ago one of my good friends played the California lottery at least weekly. He usually cobbled together a "betting group" of work friends to increase the odds of winning. Each would kick in $5 or $10 dollars apiece, and my friend would expend great effort making a list of all the contributors to the betting fund. Of course, they almost always lost. My friend certainly never won "big." Yet every week after the lottery "draw," like clockwork, he became depressed -- as if he was actually surprised that he lost. I always thought that was a bit strange. I also wondered to myself: Would his life really be different if he won big? Would his life really improve? The effect of sudden wealth was tested in a 2005 Showtime documentary entitled "Reversal of Fortune," where Ted Rodrigue, who was a homeless man, was simply handed the substantial sum of $100,000. Following a short period of living high, he quickly lost all of his money. Instead of saving, he paid off his old debts, got his teeth fixed, helped out his newly found "friends" (along with a new wife) and he gave financial assistance to his family -- a family who had nothing to do with him before. But after he blew his mini-fortune, Ted Rodrigue's life went back the way it was before. Actually he was even poorer than before. He reported having even more debt after wasting his windfall. And when the cash ran out, so did his wife. On aspect of Ted Rodrigue's story is the most interesting: When he was given the card of a financial advisor -- he tore it up. He was convinced that the financial planner was only after his money. While distrusting financial advisors, he wasted all of his wealth on parasitic "friends" and fair-weather family members. This story is not unusual; the same thing often happens to lottery winners. Yet, this story provides so many financial planning ideas, lessons, and applications. Here are a few lessons that come to mind: Give your kids an allowance. I can almost hear the collective: "Huh? Where did that lesson come from?"


But the so-called "Sudden Wealth Syndrome" proves the principle: Money has more to do with the mind and mental habits as anything else. It also proves the axiom that "it isn't what you make, but what you keep." Giving your children an allowance helps teach them the important life skill of budgeting and teaches them not to spend beyond their means. I will bet that Ted Rodrigue never received an allowance as a child. And if you are fortunate enough to be affluent, giving an "allowance" doesn't mean giving your kid the keys to Fort Knox. I have heard of some wealthy parents giving their children high limit credit cards or a monthly stipend amounting to hundreds (and yes, sometimes even thousands!) of dollars. What an awful lesson! In my view, that's even worse than just skipping the idea of an allowance. An effective allowance must be sufficiently low to encourage saving for wants, which is the purpose. But an allowance must also be sufficiently high to maintain morale. You don't want your kids to give up on saving. Rather, you want to encourage them. Writing a check for financial advice can be cheaper in the long run. Ted Rodrigue assumed that writing a check to pay for financial advice was a bad deal. Instead, he spent his bank account down to zero -- by paying everyone else. In the long run, short run -- any run! -- Ted Rodrigue would have been much better off getting professional financial advice from a competent financial advisor. When you get good advice, use it! Ted Rodrigue did not take financial advice. However, a good financial advisor would have taught him the basics of saving, investing, and budgeting. He could have actually gotten himself off of the street -- and used his newly found wealth to get a job. Instead, he is now again penniless, and his financial life again in shambles. If you really want to give -- save first! Mr. Rodrigue said "yes" to the wrong people (parasitic friends and family), and as a consequence was unable to say "yes" to the truly needy. He could have been a net giver. Consider this: Had Rodrigue saved and got his financial life in order, over his working life he could have been in a position to be a producer rather than a societal drain. He could have been a "giver" rather than a "taker." Over his life, he could have beneficially affected many people. But he forfeited that opportunity. It's not inherently selfish to save, to invest, and to be financially stable. On the contrary, being financially wise places you in the best position to assist yourself as well as others. Competent financial assistance could have helped Mr. Rodrigue master the mental art of saving, to his own benefit as well as the benefit of others.


As a a licensed attorney located in the Los Angeles San Gabriel Valley, Larry Stratton is in a position to coach and advise you, and to help you plan for your future. The Law Offices of Larry D. Stratton [http://www.strattonplanning.com] specializes in estate planning, business formation and appellate work. Larry Stratton also blogs on estate and financial planning issues at Planner's Thoughts Larry Stratton is a graduate of Whittier College School of Law, which is a member school of the ABA and the AALS. He has represented numerous clients in the California Court of Appeal, and is admitted to practice in all California courts, the Ninth Circuit Court of Appeal, and also the United States Supreme Court. From 1983 to 1984, he was a member of the Whittier Law Review. Larry Stratton is also a Registered Investment Advisor, and currently speaks on estate and financial planning topics in Southern California.

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Saving As the Ultimate Attitude Adjustment