Winning the lottery can be life-changing. It’s a rare opportunity to change your financial circumstances forever. It gives you the freedom to pursue whatever dreams you’ve had in your heart for years. But with any luck comes responsibility: once you’ve got millions in cash, how do you make sure that money lasts? Here’s some expert advice for lottery winners that will help those who have recently won big think through the best ways to handle their new millions.
Resist the impulse to splurge.
If you have won a lottery jackpot, resist the impulse to splurge.
- If you’re tempted by a shiny new car or expensive home, consider that it will lose value quickly in the future.
- Don’t spend on things that won’t matter in the long run (like cars and homes). Instead, invest wisely in your future goals.
- Consider paying off debt before buying anything. Not only will this be better for your credit score and finances overall, but it’ll also make sure that whatever money you have left over is spent on something more productive than making payments on someone else’s loan or credit card bill!
Consider working with an attorney or financial advisor – or both.
It’s important to have a trusted advisor, so consider hiring one. If you are already working with an attorney and are not sure that person is up to the task, consider asking them for help in setting up a trust or will. A power of attorney will give you more control over your finances than having all of your assets managed by someone else, but it can also be confusing to navigate since there are many different powers granted by the state (and sometimes even within counties). Working with an experienced professional can help ensure that everything is done correctly and legally so that no one mistakes it for something else—it’s better not to have any misunderstandings later down the line!
Create a team of experts.
Your first instinct may be to hire a team of experts. After all, you’re the one who won a fortune! But there are several reasons why this wouldn’t be a good idea:
- You can’t be an expert in everything. Even if you have expertise in something like investing or accounting, your new wealth will likely require some financial advice from someone who knows more about those fields than you do. You shouldn’t expect to manage everything after winning millions; rather, focus on what matters most and make smart decisions using trusted sources’ advice (and plenty of YouTube watching).
- You need trusted advisors around when things go wrong or unexpected expenses arise—and they should always know where their boundaries lie when working alongside these types of situations. This includes family members too; if there’s ever any doubt about whether something will cost too much money then ask yourself “Am I willing enough financially?” before making any decisions related thereto.“
Pay off debt.
Pay off your debt. If you have a lot of debt, it’s important to pay off as much of it as possible before investing, because paying interest will be deducted from your winnings and could significantly reduce the amount that you end up with.
Create a foundation to support causes you care about.
If you’re lucky enough to win a jackpot, it’s important to keep your focus on what’s most important. Don’t let the money distract from your charitable goals.
There are several ways to create a foundation or charitable trust with which to support causes that are close to your heart:
- Create an individual retirement account (IRA) and donate some or all of the funds from its earnings every year. Tax penalties are not incurred on transfers of up to $100 million into an IRA per year if the individual earns less than $100,000 per year in total income.* Use some or all of any lottery winnings as needed for charity.* Consider setting up a charitable trust where others can contribute money on behalf of you as trustee if they wish.
Plan for the future.
After winning the lottery, it’s important to take time to figure out how you will use your newfound wealth. Don’t be afraid to ask for help! Whether you’re interested in starting a business or buying a house, there are many ways that someone can help out post-winning.
Once you win, take some time to set up plans and systems that will help you manage your money over the long term.
When you win the lottery, there are many things you might do with your newfound wealth. You can buy an expensive home or car, pay off debts and start a business. But before making any big decisions about how to spend this money on yourself or others, it’s important not just to think about what it will cost but also how much time and effort it will take—and whether those costs are worth the reward (or whether they’re just too high).
Take some time for reflection: What kind of lifestyle do I want? Do I need anything at all? Who could benefit from having this kind of financial security in their lives? It’s also helpful if other people can help guide your decision-making process; ask around for advice from people who have been where you are now so that no matter what happens next year when taxes come due again later down the road still somehow manage everything else just fine without breaking too much sweat over doing so
Money is a huge responsibility, and you don’t want to make any mistakes with it. It’s easy to get overwhelmed by all the things you could do with your lottery winnings-but keep in mind how these decisions will affect your future too. If you want your millions to last for many years, then start planning now!