Remember The Wealth Ratio?
We’ve discussed a little regarding the wealth ratio. Let’s look at the definition again.
Wealth Ratio = Automatic Income/Expenses
You’re end goal is to get this ratio to one or greater. When you do, you are infinitely wealthy. When you reduce your expenses, you can reach one quickly. But to make it happen even faster, you have to increase the automatic income.
Ways To Increase Automatic Income
There are a number of ways you can do this. Let’s take a look at some. We’ll cover more in future posts.
One way some people hope for is winning the lottery. They buy one or more lottery tickets each week in hopes that they will win and “be set for life”. However, what are the real chances this plan will work? Well, the odds are against you.
Why This Retirement Plan Won’t Work
First, most people are putting money into this plan like they believe this is their only hope. They are in the wrong mindset and thinking that the lottery is the only answer for them to make it. If they actually were to total up the money they spent on lottery tickets, they might be surprised.
When people go into a plan in a point of desperation, there is little chance of success. What most people don’t understand is that most lottery winners have less money within 5 years of winning than prior to winning. Let me say that in a different way. Most lottery winners are worse off financially within 5 years of winning.
Why Are They Worse?
This gets back to the mindset issue. Many people are not ready to accept a large influx of income into their lives. They don’t know how to handle it. They are out of the element and they subconsciously do things that puts them back into their comfort level financially.
Is This A Good Retirement Plan?
We don’t recommend it. If you want to participate in what we call a voluntary tax by your local state, go ahead. However, it is not a good idea to depend on this for automatic income.
What are your thoughts about using the lottery for your retirement plan?
In our next post, we will look at more options for generating automatic income.
Until Next Time…