What to do if you win the lottery? 7 things to remember.
Source: Alux.com – YouTube
How many of you have considered playing the lotto? But, do you have a plan if you do win? Let’s say, you’ve won several million dollars in the lottery. The pressure of dealing with these type of sudden increases in income make most people take irrational decisions that leave them broke after only a few years of continuous spending. I know what you’re saying, ‘’If I win, I will play it safe, mostly invest a huge part of it, and it wouldn’t change much of my lifestyle.’’ If history teaches us anything, it’s not people without the proper game plan for this kind of event, usually get back to their starting point in a short term. Let’s see if we can fix that.
Below is the list of 7 Things To Do If You Win The Lottery.
Number 1: Do nothing for some time [01:02]
With a payout of six or seven figures, you might be prompted to take a major step. For instance, making an exclusive purchase, make a major donation to a charity, or even invest a large sum in the stock exchange. However, before taking an important economic decision, you need to take some time. It is best not to spend over 10% of the total amount in the first year. Have fun, but in moderation. Always remind yourself that you’re planning for the long run. You don’t want to make many mistakes that might put everything in danger.
Number 2: Enjoy yourself – but be reasonable [01:38]
Being extravagant in terms of spending is strongly discouraged. In fact, you should not enjoy the money at all for several months after they hit your bank account. Don’t quit your job. Keep living your normal lifestyle for a while. You can start by taking small portions. No more than 2 to 3%, depending on the total amount, just to give yourself and your family the taste of what this money will mean for your future.
Number 3: Look at those money from certain perspective [02:08]
After having your share of fun, you need to put the newly acquired cash into a proper channel of investment. To put it simply, money should be spent on things that generate more money. It might be useful to think about your retirement and how much money you will need to live a comfortable life. The compounded interest over time can make such a big difference. You don’t even realize. The goal is not to live off the money that you won, but on the money that big win is generating on a monthly basis.
Number 4: What do you want to do? Versus, what you should do if you win the lottery? [02:41]
Consider what the amount will do for you. Is it enough for your kids’ education, or for paying off the mortgage, or for financing the coming years vacation. If carefully planned and invested, this money can take care of you and your family for a long time. The catch is to not alter your current lifestyle that much. Consider your critical goals, and estimate how your money can take you there. The money should be enough to maintain your current lifestyle, even if you stopped working.
Number 5: Open a separate bank account [03:14]
Opening a separate bank account is often what people do with big money at hand. Make it difficult to access it. That way, you will not feel the urge to take out money for non-important reasons. If the amount is large enough, most big banks also offer well management programs, where you can see larger returns. Tax havens, offshore accounts, you might want to learn these things if you wish to keep your money.
Number 6: Get financial advice and Professional Tax Advice [03:48]
Various financial complexities come your way when you receive a large financial prize. These include income tax and estate issues, among others. This is why it is advisable to seek professional help for measuring up your cash, and managing it appropriately for building wealth. When we say professional, we’re not talking about your cousin Joe. Our best advice would be to search for a fiduciary These are people who are legally obliged to put your best interest before theirs.
Number 7: Keep emotional distance between your friends and family. Set healthy boundaries. [04:22]
Never become a human ATM machine for those around you. Winning the lottery will lead to requests of loans or financial gifts from people in need. Because you won the money, your relatives somehow see themselves entitled to some of it. Most people have no idea how to establish financial boundaries with friends and family members. So, dealing with monetary requests can be emotionally trying. Do not let others exploit your kindness. You might resent your generosity later on.
We wish you guys the best of luck if you do happen to win the lottery. It’s going to be a lot harder than you think. We’re focusing more on how you can build wealth, instead of somebody else giving it to you. What would you do if you won the lotto? How would you spend your money?