People And Their Money

Why do so many lottery winners end up broke within a few years? It is one of the most useful questions in personal finance.

The answer reveals everything. Money does not fix your habits — it magnifies them.

Bob Proctor sorted people into three categories by how they handle a month. Category 1 spends a little more than they earn. Category 2 breaks even, with nothing left over. Category 3 lives on less than they make and puts money away.

Where do most people land? The data tells the story. In 2012, only 23.7% of Canadian tax-filers put anything into a retirement savings plan.

That points to roughly three in four people sitting in Category 1 or 2 — and the pattern looks similar in plenty of other countries.

So picture handing more money to someone who already spends more than they earn. The problem does not go away. It grows.

More money simply magnifies the habits you already have. It spotlights the flaws — or the virtues — you have built around money.

Remember the chain. Habits come from actions. Actions come from beliefs. Beliefs come from what you learned. But learning something does not automatically make you do it — there is a gap between knowing and doing.

What lives in that gap is emotion. Where you feel good and capable, action comes easily. Where you feel anxious or afraid, action gets mistimed — too much, too little, or too late.

So the goal shifts. Stop chasing “more money” and start building better habits with money. That is exactly what the rest of this course gives you.

Next, we look at how wealthy people think and feel about money differently than everyone else.

Next: The Wealthy and Their Money