Mike Ruby

Mike Ruby

“Money makes a good servant, but a bad master.” Those words were spoken by Francis Bacon, an English philosopher and statesman, who lived in the 16th century. I never cease to be amazed at the problems people create for themselves from making poor choices in money management. They can be highly educated and earn a good income but their financial common sense is that of an adolescent.

I recently heard about a person who won $200,000 in a state sponsored lotto game. I don’t know how much money he actually netted after taxes, but, whatever the amount, it was a huge windfall for him. He excitedly received the check on a Wednesday. His uncle, knowing his nephew had a history of being financially irresponsible, contacted his own financial adviser on Thursday, explained the situation, and set up an appointment for Monday. The nephew was agreeable to this.

Unfortunately, the new-found wealth went to his head. No way could he wait a few days to hear sound advice from a wealth management professional. Money was burning a hole in his pocket. Enjoying a four-day spending spree, he bought a very expensive new truck, purchased elaborate gifts for friends and family, and spent considerable time and money at two nearby casinos. He was having the time of his life. By Monday’s appointment, he had just $23,000 left of his windfall. Unbelievable.

Each year, we see ads about the princely sums of money one can win by entering the Publisher’s Clearing House Sweepstakes. The winner receives $5,000 a week ($260,000 a year) for life, and upon the winners’ death the contract can be transferred to someone else until his or her death. Are you kidding? A windfall like this, lasting a lifetime, could spell disaster for the recipient. With that kind of money, there wouldn’t be much incentive to get an education or to work. This windfall could easily have a crippling effect on the “lucky” winner.

I’m not against big buck sweepstakes, but I think it would be much healthier to have 10 winners receive $500 a week ($26,000 a year) for life, with no option to transfer continued winnings to someone else upon death. Tempting people with large sums of money in exchange for little or no effort perpetuates the “money is my master” mentality and can have disastrous results.

Money is a wonderful tool and can help bring considerable enjoyment to one’s life if managed properly. When a financially responsible person receives a major windfall, it should not significantly alter their standard of living or course in life.

The world needs more people who take Francis Bacon’s advice and understand that money, if not handled responsibly, makes a very poor and disappointing master. With the start of the New Year, this is a good time to reflect on our attitude toward money.

Mike Ruby is a Muscatine resident who writes a monthly column for the Journal.

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