(ThyBlackMan.com) Sharon Tirabassi was living the dream. She won the $10.5 million dollar lottery in her home country of Canada, earning her a consistent residence on cloud nine. All the things that she’d always wanted were wide open to her: Expensive cars, fancy houses, designer clothes and expensive vacations. Her financial freedom was right in front of her eyes, and it was time to live the lifestyle she’d always deserved.
But years later, Sharon Tirabassi rides the bus to work. When she doesn’t feel like riding the bus, she rides her bike. She’s not doing it for exercise. Instead, it’s because she can’t afford to fix the car that sits in the family’s driveway. All the relatives who were quick to borrow money from her when she won the lottery are nowhere to be found. She’s now finding herself getting reaccustomed to the lifestyle to which she’d become accustomed so many years ago. The fall has not been easy.
I feel bad for Sharon Tirabassi, the same way I feel bad for every NBA or NFL athlete who goes through the same experience. They say that it’s better to have loved and lost than never to have loved at all. But this isn’t true when it comes to money: It’s usually better to have never had the money in the first place than to have it and see it all slip between your fingers.
As a Finance Professor, I think about money a lot. Also, my grandmother, who was my first finance professor (with no college degree) taught me a few things about money that I hold onto till this day. In spite of being a single mother who never made more than $25,000 per year, my grandmother always had money, maintained perfect credit, and never had to borrow a dime from anyone. Here are a few things that my grandmother taught me, that were later confirmed when I got my PhD:
1) Money is behavioral: My grandmother used to tell me that if you think like a saver, you’ll always have money. If you think like a spender, you’ll always be broke. So, the truth is that, no matter how much expertise you have, you must choose to have financial discipline the same way that you choose to eat the right food. Knowledge means nothing if its not applied, which can effectively turn you into the chubby gym teacher.
2) Always invest and spread your money out: One big investment is rarely a good one, so that means that putting all of your money into Billy’s Liquor Store or Tiffany’s line of doll houses is usually not a very good idea. Most NBA athletes who go broke do so largely because they’ve put a bunch of their money into private equity investments that fail, rather than investing in a diverse portfolio consisting of a variety of asset classes. If that last sentence didn’t make sense, just talk to your financial adviser and let them handle it for you. The key here is to not put all your eggs into one basket.
3) Never forget Uncle Sam: I hope that Sharon Tirabassi, upon winning the lottery, didn’t visualize herself as having $10.5 million to spend. This is big mistake from the beginning, because we all know that the IRS loves to take your money. Most athletes and entertainers who end up broke usually do so because of some kind of ill-advised tax situation that they knew nothing about.
No one is perfect when it comes to money. But the fact is that, in the age of information, there is no excuse for being financially illiterate. As my grandmother taught me, a good dose of common sense and moderation can go a long way when it comes to managing your money. In fact, I’ll go get some advice from her right now.
Staff Writer; Dr. Boyce Watkins
Dr. Boyce Watkins is the founder of the Your Black World Coalition. For more information, please visit http://BoyceWatkins.com.
