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You might think that after winning the lottery, you’ll never have to worry about your finances again. However, after a little bit of research, you’ll quickly find that this isn’t always the case! Countless jackpot winners through history have found themselves in situations where they wish they’d never even bought that winning ticket! Though your win may have covered a few immediate financial problems, you’re not out of the woods yet! Here’s how to protect your winnings and make them work for you.
Choose Between a Lump Sum or Annuity
This is one of the first things that a lottery winner will have to decide on, and many different factors go into it. With the sheer amount of money you have coming your way, along with the earnings you’d gain from it, you could quickly find yourself in the highest tax bracket, and staying there for a long time. Talk to a financial advisor, and figure out if you’d stand to make more from investing the lump sum than what the annuity will pay over time. Generally, you’ll find it much easier to make projections with an annuity compared to a lump sum. Though the decision may seem like an obvious one right now, there are a lot of factors you’ll need to chew over before settling.
Get Used to Saying No
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If you choose to go public as the winner of a lottery jackpot, you won’t have long before you’re bombarded with messages from various family members, friends from way back, and various other people all asking for your money. One of the less pleasant aspects to being a lottery winner is having to learn to say “no” here and there. You’ll have plenty of time to consider hand-outs which you genuinely want to go ahead with, so don’t feel pressured by all that attention! There are people out there who won the lottery years ago, and are still getting requests for money. A jackpot is a lot of money, and in order to create a solid financial plan, you need to have a period where you leave your winnings relatively untouched.
Don’t Rush Through Financial Decisions
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One of the most common financial mistakes made by lottery winners is that they make large financial decisions without taking the time to think them through properly. Aside from the choice of how you’re going to receive your winnings, investments, and miscellaneous things like structured settlements, the sudden financial freedom can really go to a lot of people’s heads, and lead to some seriously rash behavior. Despite how you’ve always envisioned a win like this, you don’t have to give massive, extravagant gifts, buy luxury homes, or commit to any risky investments as soon as you have access to your money. You should take it slow, gradually learning what it means to have a massively different economic status, before you start thinking about the steps that are going to make the most sense for you and those you care about.
