Ok, You have won couple of millions dollars in lottery. Suddenly, you have become rich. You have seen many lottery winners stories, who lost it all. So, you know you need to take some steps to protect yourself from loosing your winings in foolish way.
What do you do with all that money won in lottery? Until now, your focus has been on making a living from paycheck to paycheck?
No need to worry TheInfographicShow has prepared: The intelligent person’s guide.
How to spend winnings from lottery sensibly? Smart ways to spend your winnings.
Source: TheInfographicShow – YouTube
Winning the lottery can be a mixture of different feelings.
On one hand, it can have the power to make all your dreams come true. And you can finally tell your boss, with the stupid little mustache, exactly how you feel about him.
But on the other hand side. You’re going to have to deal with the instant fame. You need to be prepared for a lot of people in your life, who suddenly want a handout.
If you’ve seen video episodes about lottery winners, then you’ll know that people are going to come begging. Not just your own family, but complete strangers. Who somehow think that, suddenly, they’re entitled to some of your cash.
But you’d be lucky if begging is all that comes with your lottery win. Some of your own family members may in fact try to kill you, hoping that they can inherit some of your cash.
If you don’t want to end up being fleeced by leeches trying to get at your dough. or If you do not want to end up on some hitman’s list. You need to learn, how to spend that money intelligently.
It’s okay to splurge some. After all, you did just win the lottery, get yourself a few fancy things. Take a nice vacation. Maybe take some of your more murderous family members with you to stay on their good side. But don’t go overboard with it. First, if you start spending big, it’s only going to encourage beggars. Suddenly, people that you played jump rope for 1 day in kindergarten start popping up in your life. They start claiming that you are the best of friends. Old lovers start to serenade you with ceaseless sonnets of their unending love for you.
There’s another good reason why you shouldn’t start spending money right away, it attracts criminals. Lottery winners are prime targets for thugs, who intimidate and threaten lottery winners into giving them large sums of money. It also attracts a specific type of criminal, the scam artists. These professional con men will grease their way into your life, claiming to be anything from a financial advisor to a business entrepreneur. They might actually pose as old friends you lost touch with. The best way to avoid all this unwanted attention is to spend discreetly. A few luxuries are nice. But don’t suddenly change old Ford Fiesta, to brand new Lamborghini.
Another prudent reason not to go onto a spending spree is the simple fact. The most luxuries don’t come with a 1-time price tag. That fancy red Lamborghini you just bought. Its monthly insurance could be as high as $568. Think buying a mansion is a smart move? Hope you’re ready for heating and air conditioning bills that are a few thousand dollars a month. Big homes take a lot of heating and cooling after all. How about paying landscapers and gardeners. They keep your home from being overrun by nature. That’s about 1000 a month. And do not forget the government. Property taxes every year can be in the 6 figures bracket.
Perhaps set more realistic expectations for yourself. Luxuries are not 1-time purchases. Once the money is gone, there’s a little chance your previous income is going to cover all the fees of your new fancy lifestyle.
Instead of blowing money on fancy things you see on TV, focus on spending the money on helping you achieve that fancy lifestyle. So you can afford these things on its own. You have unique opportunity. This couple of million dollar might completely change your life. That is the secret, why most lottery winners end up broke. They see the money as a windfall, not an opportunity. And when those money runs out, they are back in the same place where they started.
How to prepare yourself for a brand-new lifestyle and use this rich godsend to catapult yourself into a brand-new life?
First, remain anonymous.
If your the terms of your lottery allow it, remain anonymous. Those rules differ. For example, in New York lottery winners are on a public record. Some States allow lottery winners to remain completely anonymous. This certainly would help to cut out a lot of the beggers. You can set up a trust to receive the winnings in your name. A lawyer would claim the prize on behalf of the trust.
You have to decide if you want to take the cash up front or receive payments in 30 installments over 29 years.
There’s a lot of things to consider here. For example, what exactly are your plans for this money? If you don’t have plans yet or if you know you’d be too tempted to spend foolishly, take the installment plan.
You should also consider which way you’ll end up receiving more of your money. Tax laws in different jurisdictions might favor you taking the full payment up front. Rather than being taxed on every single instalment, or vice versa.
With taking instalments, there’s another issue to consider. What will happen to your family. If you die before the 30-year period? This will leave your family with the burden of paying an estate tax on your winnings. This could mean that the money quickly end up. Before you decide how to receive your money. You must have a conversation with tax professionals. You have 60 days to decide, this is plenty of time.
This is obvious thing. You must pay off all your debts. Just do it.
We shouldn’t even have to explain why. You would be surprised, how many lottery winners continue to make monthly payments on their old debts. After all the lottery money is gone, they are still stuck with their old debt, and likely with a great deal of new ones. Don’t be a dummy. Pay back any debt you currently have. Then you can enjoy the rest of your money.
Next thing to do:
You should set yourself up with a team of legal and financial advisors.
And we don’t mean your mom, dad, and big brother. We mean professionals, people with credentials that you can trust. They advise you, how to best handle money.
This is another major pitfall for lottery winners. Even though we read every day about the rich people having financial advisors. For some strange reason, lottery winners mostly never think to actually get financial advisor themselves.
So, If the rich and wealthy need financial advisors, it’s probably because having lots of cash is something that needs careful management. Especially if you plan to make even more cash, with your lottery winings, something you defenietelly should.
Verify each financial advisor you meet. Check broker records at the Financial Industry Regulatory Authority. There you’ll be able to see if they have any pending or past legal actions or legal complaints against them. You can do the same with attorneys and insurance agents to see if they’ve been subject to any legal filings against them.
It’s incredibly important to verify the people you’re entrusting to advise you on how to manage your fortune. Please don’t take shortcuts. Also, having a financial advisor allows much easier to say no to all that beggers. You pass that responsibility on to your financial advisors.
Ask your advisors on the best route to invest your winnings. Many of them will recommend that you don’t even touch your winnings for the first 6 months. Instead, put it into short-term investments that will yield some initial returns. This means you won’t be able to live the high life right away. But you’re already investing your money. Also, you would be able to tell people that you can’t give away any money right now. Because those money has been invested in various investments. In 6 months’ time, you can start to live off the interest earned on those investments. Ask your financial team for more long-term plans. No matter how insistent are beggers, continue to ignore them.
While your money is being invested, learn to live within a budget. Set spending limits for yourself, or even better, ask your lead advisor to set up a monthly allowance for yourself.
As your money work for you and earns more, your monthly payment would grow to reflect your growing fortune. It might feel like being a kid again and might be frustrating that you’re not living the highlife right away, but prudence and discipline will be exactly what lets you completely redefine your lifestyle. And in a few years, your money will have hopefully exponentially grown through wise investments.
Another smart move is:
Set up an annual charitable donation. Not only will you be doing a good thing for others, but those who donate to charity are eligible for huge income tax deductions. And remember, your income taxes are now going to be based off your new wealth, and not your old paycheck. Basically, don’t expect a return on your taxes, and instead, expect to owe a lot. But with deductions of up to 50% of adjusted gross income, you can offset how much money you’re giving back to Uncle Sam, and do some good at the same time; a natural win-win.
Honestly, we can’t harp enough on how prepared you need to be for taxes. If you win big, you better be ready to pay big tax bill. Not only do you have to worry about property taxes on any new homes and income taxes on your winnings. Probably for the first time, you have to start to worry about the estate tax. In the USA in 2016, each person was entitled to a $5.45 million limit on tax-free transfers of wealth after they died. This is the most money their family could receive before tax office ask for part. If you won big money, really big, it will be prudent to start thinking about how your money is going to be handed down to your next of kin in case you die. This is another reason why you need financial advisors.
Winning the lottery can be a life-changing event, but unfortunately for most, it only leads to ruin and the depressing reality of ending up exactly where they left off. For smart people though, winning the lottery is the key to creating a brand-new lifestyle for themselves and setting them on the path to financial success for life. But whatever you do, don’t give your siblings any money to open restaurants. Restaurants are terrible investments.
If you win large amount of money while playing lottery. How would you spend your lottery winnings? What would be your plan?