The 5 Stupidest Habits You Develop Growing Up Poor

[lumberjack_jeff]

111. I learned how to drive without crashing any cars.

Why? Because the drivers ed car had a brake pedal for the instructor's use. I'm sure it was an insulting and demeaning infringement on my personal sense of autonomy at the time, but somehow I don't remember it that way.

If your income is high enough, you can afford to make all the "life skills" mistakes and learn through trial and error. The author flat-out says that windfalls all create the same response: spend it before it evaporates. That reflects an absence of life skill and there's little reason to suppose that doubling the size or frequency of his financial windfalls would mitigate that.

http://www.marketwatch.com/story/why-lottery-winners-go-bankrupt-1301002181742

Big lottery winners, defined by the researchers as those awarded between $50,000 and $150,000, were half as likely as small lottery winners to go bankrupt within two years of their score but just as likely to go bankrupt three to five years after. "The results show that giving $50,000 to $150,000 to people only postpones bankruptcy," the authors concluded.

Perhaps most shocking, the typical big winner in the sample was awarded a prize of $65,000, while the most financially distressed ones had unsecured debt of $49,000. In other words, the cash was more than enough to pay off everything most winners owed.

The researchers offer a few theories on why so many winners went bust. Prior research has shown that lottery players have below-average incomes and education; it's no great leap to assume they tend to have limited financial literacy (even compared with a general population that has been shown to sorely lack it). Winners might also engage in something behavioral economists call mental accounting by treating their winnings less cautiously than they would their earnings. Of course, winners might simply "develop a taste for luxury goods that outlasts their money," the researchers write.