How to Manage the Money You Won in a Lottery

What will you do if you win a lottery?

One of the most trivial questions that we all hear is thinking and have imagined the answers to. Isn’t it the answer to many of our problems? Having lottery money can get you out of so many troubles.

“Your chances of winning the lottery are identical whether you play or not.”

Winning a lottery is always a possibility, but only when you buy it. The odds of winning a lottery are very slim, and we can’t even talk about that stuff without sounding moronic. So, we will not talk about that stuff today.

Let’s talk about things after winning a lottery. Think of the things you can do in case you have accumulated many funds.

Whenever you think of a lottery, you think of an expensive and luxurious lifestyle. Being able to quit your job and travel the world, travel in style, pay off your personal loans for bad credit with business class tickets or private jets, stay in five-star hotels, buy a big house, gold, diamond, expensive gadgets, expensive cars… oh! The list is endless.

Can we ever be content! I guess no. Well, the lottery is a similar kind of scene, where people get rich overnight. People go from rags to riches in just a few minutes and back from riches to rags within months.

Find out about previous lottery winners. Very few lottery winners remain rich. Most of them lose all of their newfound fortunes. Why does that happen?

Have you become Bankrupt After Getting the Lottery

It might come as a surprise to many. Statistics suggest that 70% of lottery winners become bankrupt within three to five years. Another surprising thing that you should know is,  winning the lottery does not help people get out of debt; on the contrary, bankruptcy rates for lottery winners increased a few years after they won.

As per the study, lottery winners generally end up broke.

So, to answer the big question, why does the lottery winner end up being broke?

According to the experts, excessive spending, risky investments, and shoddy bookkeeping deplete all the funds, resulting in poor financial conditions and bankruptcy.

Of course, some lottery winners make it through the ordeal and go on to prosper, but the percentage of successful people is very small. Following is the list of a few reasons:

1. You will go bankrupt if you are not disciplined. It does not impact too much on how much money you have.
2. Many lottery winners want to tell their family and friends about their good fortune and share it. It causes conflicts and loss of money.
3. Tax responsibilities are one of the primary reasons why lottery winners lose money and go into debt.
4. They have an uncontrollable need to spend money on unnecessary things.
5. A lottery winner frequently wants to relocate to a larger, more expensive home and purchase a new vehicle.
6. They will get much less money than they expected
7. The unimaginable joy and anticipation lottery winners experience frequently results in tragedy.
8. Despite the reality that all currency has the same inherent value, lottery winners perceive money they have won from a prize draw differently from their earned money.
9. Almost none of the lottery winners have professional assistance from financial advisors.
10. Lottery winners don’t merely squander their winnings; they may not have had much to begin in the way of savings.
11. Poor advice from peers and family members takes them away on a different route. In order to double their money quickly, they make poor investment choices.
12. Because it’s challenging to hide the fact that they’ve won on social media, family members, friends, and former acquaintances come clamouring for their piece of the prize money.
13. This might be out there, but it just happens. A lot of money could cause depression and spend more money on drugs and also.
14. With never-ending need and greed, people start spending enormously, and once the money is over, they get debts to spend even more money to compensate for their luxurious lifestyle.
15. Winning a huge lottery makes you pre qualify for a personal loan without hurting your credit. It may have both plus and minus sides. And mostly, it ends up damaging your finances if you lose control.

Tips to Manage Money if You are the Chosen One

Well, congratulation if you have won the lottery. You are the lucky one. Now it’s time to think and plan to keep your fortune with you.

1. If possible, remain anonymous: When word gets out about the lottery, you’ll be bombarded with pleas for help from even long-lost relatives.

If possible, make sure to remain anonymous as per the laws and stay away from the limelight as much as possible.

• Avoid making drastic lifestyle changes: As soon as people win the lottery, they start spending. As per the experts, don’t do anything radical, at least for the first six months after winning, and don’t even think about quitting your work.

Maintain your lifestyle and slowly advance it. Having a financial goal and plan is essential.

People start buying big house, upgrading their cars, taking expensive vacations, all of which proves to be fatal for their finances. My suggestion; slowly get into a good lifestyle.

• Make a plan to pay off all of your debts: Shouldn’t this be the first on your list of things to do.! There is no better plan to use your money than paying off debts.

Whether you had taken emergency loans for unemployed,credit card debt or a mortgage, clear them all. It will give you an idea of how much money do you have after paying debts so that you can plan your next steps. Paying off your debts will even build your credit score.

• Avoid any major purchases: For example, buying your favourite car or house in your favoured location. You should not decide anything in a hurry.

Give this time. Once you are settled with your financial plan, start spending slowly. After all, it is your money.

• Meet a legal and financial advisor: Now that you are sitting on a huge sum you can afford, you must spend some money on expert advice. Having your own lawyer, accountant, and financial adviser, when working together, can take your finances to new heights.

Make any investment or related decisions after having a proper and prolonged discussion.

• Consult a tax professional: After the announcement of the winner, you have some time to receive the prize money. It is necessary to know about the taxes and how much can you lose to taxes.

Talking to a tax professional will help you calculate the tax and find out ways to save, if possible, on your tax amount. When you get the lottery payment, pay your tax on the whole amount right away.

• Invest but with care: Yes! It is true that investment is a good option but is it always though! Short-term or long-term investments require the prior calculation of risks, management, and contingency plan.

Having an adviser will help you split your money into parts and invest wisely in different areas. Don’t invest all of your money in something that seems too wonderful to be true.

• Safeguard your fortune: People who become rich suddenly are properly not aware of things like safeguarding money. Corporate creditors can strip you of all your money if you are careless in this.  

People like Disgruntled spouses can file cases against you for their share or even the whole amount.  It’s a good idea to make sure you’re not a simple target, which is why you need a legal advisor.

• Philanthropic donations: Since you receive a lot of money out of the blue, it is really a good reason to be philanthropic. It will add good to your image as a winner, and it might be helpful in some tax deductions.

Talk to your financial advisor.

1. Budget: People who follow me know; I can’t stress enough on this. Everyone should budget. Rich, poor, unemployed, self-employed or an employee, always have a budget if you have money.

Making a budget if you have won the lottery is more important. It will make you aware of your fortune so you can plan ahead and don’t fall into binge spending. It gives you the self-control to save your wins and not go on spending on totally unnecessary expensive things.

Conclusion

Winning the lottery is nothing short of an extraordinary thing. Winning a lottery can bring a lot of joy at the same time. It can have several adverse effects as well. It is necessary not to lose your cool, be composed and disciplined.

Manage your finances well, stay within budget, invest wisely and stay wealthy.

Read Also – MOVING OUT OF FAMILY AND HANDLING BUDGET LIKE A PRO