Why do people blow their windfall? (husband, parent, father, responsibility)

[brittstea]

I’ve never understood why some people who have lived in or near poverty their whole lives blow their windfall. My aunt is 50 years old, lived off the government for most of her life, worked minimum wage part time jobs here and there, lived in and out of her parents place, just never really had any amount of responsibility and made very poor life choices and hung around people who were a bad influence on her despite numerous attempts from family to deter her from that lifestyle. I don’t care about how she lives her life, or how anyone else lives theirs. What baffles me is that abou a year ago she was awarded a $75,000 insurance settlement for some accident she got into. Mind you, she had no other out of pocket expenses, so the $75K was all hers. First thing she does is........ drum roll......... goes and buys a brand new car off the lot, that was $36K. So now she’s left with $39K. She just blew the rest of that by nickel and diming it away on frivolous stuff here and there.

Why, in general, do people like this tend to just waste money when they get it? Now, after the fact, she’s asking me how to invest and where to invest etc. It’s too late.

I have other examples also of similar behavior. Someone else I know spent the majority of their life barely making ends meet until they mysteriously landed a job as a civilian contractor over seas making $150K a year. He spent 3 years over there meanwhile acquiring all kinds of toys at home- dirt bikes, atv’s, cars, guns etc. About 6-8 months after he was back home I found out he was selling almost everything because he was broke. Didn’t pay an extra cent on his mortgage. Dumb.

What is the psychology behind this behavior?!?!? When my husband and I sold our first house, we walked away with nearly $80K in profit. We put $50K down on a new house and put the remainder in a vanguard fund as an investment. We’ve seen 20-23% return on that money the last few years.

I’ve tried talkinto these people about finances but it goes in one ear and out the other. And then they whine about being broke after they’ve blown their money on frivolous material objects.



Edit: I apologize for my poor sentence structure and grammar. I’m not an English major.

[BirdieBelle]

A financial windfall can be similar to a hit of a powerful drug. Most who have not been educated about proper stewardship or do not have the discipline to manage their money simply cannot handle that kind of sudden injection of fortune.

Add to the equation the influence of family and "friends" who have their own motives, and the chaos of the situation becomes easier to understand.

[convextech]

Originally Posted by brittstea

My aunt is 50 years old

I am 50 years old and am not poor, but when my father died, I blew the $50k insurance payment on traveling, a new computer, a new camera, etc.

I regret it, and wish I had paid off my car earlier (it's paid off now) or bought a Jeep, but I didn't, and life moves on. *shrugs*

Being poor doesn't have anything to do with it.

[Aredhel]

They have little ability to defer gratification, and they have no experience handling significant sums of money. Those, in a nutshell, are the reasons.

[TCHP]

Originally Posted by Aredhel

They have little ability to defer gratification, and they have no experience handling significant sums of money. Those, in a nutshell, are the reasons.

Bingo! Most peoples financial education is pretty limited.

[Ghengis]

Hey! free money...spend it as fast as you can before someone figures out they made a mistake and wants it back

[crd08]

Originally Posted by Aredhel

They have little ability to defer gratification, and they have no experience handling significant sums of money. Those, in a nutshell, are the reasons.

Basically what I was going to say.


Oil and gas blew up here and people who were dirt poor were being handed loads of money in exchange to see if their land had oil. If it did, more money. Some were smart, but some were very ignorant.

[GeoffD]

Poor people are poor because of a lengthy string of poor decisions. Why should yet another poor decision be surprising.

The more interesting question is what could be done to break the cycle. It's education and role models.

[reneeh63]

People figure, "easy come, easy go". They didn't have anything before so why not enjoy this now?

Maybe they don't really believe the windfall will help them in the long run or they don't realize how much they're spending until so much is gone they figure they might as well spend it all.

[blueherons]

Same reason most lottery winners end up destitute.

Managing money is work. If you've never been taught how to manage money, you aren't magically going to learn once you get money.

Live within your means and you'll never worry about money.