Why do so many lottery winners end up broke and worse off than before their wins? I found stories from The US, UK and Australia very easily. Peter Kyle’s story, in today’s Sun newspaper(!) is a good example. He started off with £5.1 million and now owes money, spending his winnings at the rate of £4,600 per day. On the same page is a message from another winner who blew almost £9 million in even less time. Their stories are duplicated anywhere there are lotteries, yet it doesn’t happen to everybody. Take the story of Brad Duke, he won $85 million in 2005 and he’s now worth about $130 million. What’s the difference between these people?

I have spent my whole life working with and studying people and I know this - it comes down to a few very simple differences…

In my consultancy business, I teach leadership in the British Fire Service. I spend a lot of time with groups of people who all earn roughly the same amount of money, and yet they often have very different financial situations. I know firefighters who are millionaires and I know some who carry debt they can’t hope to escape before they retire. The difference isn’t kids or mortgages, dependants or medical bills (we don’t have those here), it’s not even the spare time they have or the skills they’ve gathered - It’s the beliefs they have about money.

Our thoughts and beliefs about the world and everything in it dictate our experience. We all grow up hearing things about money; “money doesn’t grow on trees”, “don’t die with fun in the bank” or “a penny saved is a penny earned”. Just take a moment and think about living as though each one of those sayings were the actual truth, wouldn’t they yield different results? What happens is that, without knowing it, we actually do live as though those beliefs we’ve absorbed really are the only truths about money.

Our beliefs and the thoughts they engender, set the financial parameters for our life. It’s as though we are calibrated to a specific range. To go outside that range is difficult, if not impossible, without changing those beliefs. I have a friend who’s been unemployed for a while after being made redundant. She has a bit of debt. For a lot of the people around her, she is in very serious debt. They live their lives hand to mouth, some on state benefits. Let’s say her debt is £2,000. When she is back at work, she will pay that off quite quickly. She is relatively comfortable with it but much more debt would begin to make her very uncomfortable. Last night I spoke to another friend. She has been financing her company through a difficult time. Her debt is considerably larger, in the region of £40,000. She carries this with no discomfort at all. She is confident that when she starts earning again, she will pay that off in a few months. These people are both very bright and very able. Both have good marketable skills. They do have very different beliefs about money though.

When I was starting my business, I got into about $63,000 of debt. That was a huge amount of money for me. I had only ever earned about half of that in a year up until then. However foolish it seemed to other people, I wanted to follow my heart and do work that gave me joy. The fear was creeping up on me though, I was in way too much debt to sleep well. Then I read Richard Branson’s book, Losing My Virginity. In it, he wrote about a time when he nearly lost everything and he realised the only way to survive it was to “expand his way out of trouble”. He says that is what he’s done every time things have got difficult. I will never be as rich as him, I don’t have the desire or drive, but that one sentence was like a beacon in the night to me.

From the moment I read that, I determined to go about expanding my way out of my problems. Now, $63,000 is not so much any more. It sounds even less in £s. I didn’t set about doing anything differently, just worked on changing the calibration. Since that time, there have been months when I have earned more than I ever earned in a year before. This is why I put so much focus on beliefs in The DebtFree Playbook.

So, back to the lottery winners. Peter Kyle thought he was lucky after living on State disability benefits for a long time, he became rich. Now he’s back to living on the same benefits. He is calibrated that way, his beliefs set his life at that level. On the other hand, Brad Duke didn’t believe he was lucky, he set out to win the lottery with a specific end in mind. He spent the first month surrounding himself with a team of advisors who thought bigger than him around money. He had a specific goal, to increase his money to $1 billion inside ten years, currently he’s on target to make it in 12 years. He’s had a lot of fun, done things for his family and treated himself to some stuff, but no flash car and no new house yet. He worked on his thoughts and beliefs, his calibration.

How are your current beliefs shaping your finances? Are you calibrated for debt, just enough, prosperity or wealth and riches?