If you want to keep a business empire or a $100 bill in the same hands for a long time, you need to have a certain way of thinking about money. Most lottery winners can't keep the huge amounts of money they win because they don't have this same mentality. I call this mentality the "Leaky Wallet Syndrome."
The problem with keeping money is that it only takes one mistake for you to lose it all. When I say "weakness," I mean that you want something so much that you'll buy it even though you can't afford it. No matter what this purchase or payment is, it gets you to a point where having something now is more important to you than having something tomorrow. There is a trigger that gets in the way of your normal, well-thought-out decision-making and makes you want something right away. I think it's a lot like dieting in that you have to eat food, but if you keep eating even a little too much, you'll get sick. In the same way, you need to spend money, but you know what will happen if you keep spending even a little too much.
Let me name a few areas where people often have trouble with their money: vacations, clothes, cars, shoes, personal electronics, charities, any kind of collection, books, Christmas gifts, watches, pets, jewellery, relatives, eating out, boats, hobbies, sports, etc. And these are just a few of the ways your wallet could be leaking money. If you have a lot of them, your wallet could be in a lot more trouble.
If you have never had much "extra" money, you might not know what your financial weaknesses are. They might not show up until you get a sudden windfall (like an annual bonus, tax refund, pay raise, inheritance, or winning the lottery) and aren't used to or ready for the pressure you feel to spend the money. Think about some of the things at the top of your list that you would buy if you had the money. This will show you some of your weaknesses. How many of these things would your friends and family think were reasonable purchases and how many would they think were a waste of money?
If you are still not sure if you have Leaky Wallet Syndrome, your checking account may tell you: At the end of each month, do you have money left over? Can't pay off your credit card balance in full every month? Do you have any past due bills? Do you try not to balance your checking account or hide it?
Let me give you a couple examples. A person I know has three children, and I think she is financially smart in all but one way. And because of this one weakness, she has always had trouble with a lot of credit card debt. She's been in debt as long as I've known him, and the only thing that makes him weak is a certain self-help seminar. At least once a year, if she has enough room on her credit card, she goes to one of these seminars and puts the whole thing on her card. I don't see her doing anything with the information she learns, even though she thinks it's so important. I'm afraid she's putting her family's financial future at risk.
I don't want to hear about any more non-profits that use the money they get from donations to buy supercomputers to analyse direct-mail campaigns instead of working on their stated cause. In another case, the grandmother of a person I know is easily swayed by requests from political groups on the left. If a direct mail piece shows up in her mailbox, they will get a donation from her, even though she can't afford it. And now, like a good poker player who can tell when his opponent is weak, her mailbox is full of requests for money.
People aren't the only ones who get Leaky Wallet Syndrome. A family friend works as a consultant for private businesses to help them turn around. He says that most of the time, his services are needed when the business is in its third generation from its founder. The founder builds a successful business, and the second generation is taught by the founder how to run the business. But by the third generation, the business has so many family members on the payroll who don't add value and family fights stop any efficiency or reform that only a Herculean effort from someone outside the family can save the business from so many ways of overspending.
Leaky Wallet Syndrome is easy to find close to home (has anyone seen my Ferrari? I mean my Ferrari key ring with a used Honda key?) , but you need to fix all the holes in your mind before you can make progress toward your financial goals. This work also helps you get ready for any unexpected money that would quickly leave your wallet.
