The jackpot for Saturday’s (at the time of writing) Lotto is an estimated $22M. If you win it, you won’t ever have to worry about money again–right? Wrong.
With good money management you–and your heirs–could live handsomely for many, many years. But from the moment that you claim that prize, you will be descended upon by vultures who want a hefty helping of those winnings. And if you didn’t have smart money habits up until now, you could easily turn out to be your own worst enemy by quickly squandering the fortune.
Take a deep breath and take your time. You have 180 days from the date of the drawing to claim your prize, so don’t run off to the lottery office first thing the next morning. Let yourself calm down, and then set to work carefully forming your team and plans before you contact NLCB.
Protect your privacy. As tempting as it may be to shout it from the rooftops and throw a huge ‘I won the lottery!’ party, keep it as much to yourself as possible, especially before turning in your ticket.
Once people know you’re suddenly wealthy, you’ll be badgered by requests for handouts from everyone from charities to long-lost friends and very distant relatives–not to mention all the financial “experts” who will be vying for your business.
Avoid sudden lifestyle changes. For the first six months after you win the lottery, don’t do anything drastic, like quitting your job, buying a holiday home in Bequia, trading-up for a luxury car or building a collection of Michael Kors handbags. Set aside fixed amount for splurges—it’s only natural to want to celebrate your windfall. Save the big purchases for later. For example, if you need a new car, buy a middle-of-the-road model for now.
Pay off all your debts. There is no better investment than paying off debts. Whether it is credit card debt or a mortgage, your rate of return equals the interest rate on the loan particularly with today’s abysmal yields on relatively secure investments like Fixed Deposits. When you’ve paid off dollar of debt, that’s a dollar you no longer owe. When you invest a dollar, you can’t be sure whether it will grow or shrink.
Assemble a team of legal and financial advisers. In situations like this it’s very hard to know who’s trying to help you and who’s trying to use you. Handpick your own lawyer, accountant and investment advisor carefully and let them work together.
Before you start forming specific financial plans with your advisors, step back and think big-picture about what you want from this money. Write down your personal, financial, lifestyle, family, and charity goals, and return to that plan later to help keep things on the right track for the long run.
Next week, suggestions how planning for the future after winning the lotto.
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