Tonight’s Powerball sweepstakes will feature a record-breaking grand prize of more than $500 million, as people everywhere will be lining up today to get in on the last minute ticket action.
According to advanced mathematical calculations, you’re more likely to:
- Die from the sting of a bee, wasp or hornet
- Become a Hollywood starlet (particularly for men)
- Get struck by lightning
- Die by asteroid-related accidents
But for those of you willing to throw your hat in the ring, the payoff could be huge. And if you win, you’ll need a game plan to make the money last – according to recent surveys, nearly three-quarters of all lottery winners lose their earnings within several years.
If you’ve been gripped by lotto mania, here’s how to best survive the most unlikely event of your life.
1. Stay Grounded
As the latest Powerball winner, you’re bound to end up on TV interviews, local news stories – the sort of thing that really puts you on the map. For most people, this seems like a dream come true. But in reality, being just another face in the crowd can be a more stress-free lifestyle.
“The number one downfall of lottery winners begins when it is announced that they have won the lottery,” said Dan Larsen, Financial Advisor and founder of Larsen Financial Management. What he means is this: your life just changed forever, and the best way to deal with it is by sticking to what you know best.
“Tell as few people as possible – best case, your spouse at the beginning,” said Frederick Hubler, President of Creative Capital Wealth Management Group. “Make no sudden moves, like quitting your job or buying a Ferrari.”
You might not be able to avoid tellingeveryone , but that doesn’t mean you have to flaunt it. Take the time to process your win before you even think about what you’ll do with the money, especially during lean economic times.
“The real issue is dealing with the emotional aspects of the money,” said financial coach and advisor William Pitney. “Most financial advisors will immediately offer advice on spending, portfolio management and taxes – this is the wrong approach.”
By working first on the emotional side of winning, you’ll be able to successfully come to terms with your newfound wealth, which can help avoid rushed, hasty decisions in the future.
2. Create a Plan
“Talk to a trusted financial expert and immediately set up a financial plan,” said Nicole Wright, financial and tax consultant at Wright Financials. “Continue to check in with your consultant frequently.
Establishing a financial plan now could save you plenty of headaches – and wasted dollars – later.
Because of the tax and legal complications of such a large sum, many financial experts advise against making any impulse decisions right off the bat, including buying a car or house, or telling your boss you’ve had enough.
“Don’t quit your job,” said Bob Williams, Senior Vice President of Delta Trust Investments, Inc. “Working keeps you from spending, and it’s easy to burn through the cash with nothing to keep you busy.”
Tame your possible debt, spending, and impulse buys, with a financial strategy from the get-go.
“Because it’s more difficult to grasp the value of $200,000 than of $200, winning the lottery can disrupt our established impulse control,” said Financial Advisor Dan White, of Daniel A. White & Associates. “That’s why it’s so critical to have a plan to handle these situations with the future in mind.”
3. Surround Yourself with the Right People
Lawyers, accountants, financial advisors andtrustees are all people that can help – or hurt – the way you manage your lottery winnings. Shay Olivarria, financial education speaker and author, says that diversification in the beginning of your search will help you find the right people for your financial team.
“Ask three attorneys before you decide to do anything.” Olivarria said. She notes that there are pitfalls to different payments types – lump sums, payments, accepting in the name of a trust – and working with just one person may skew your view.
Bob Williams advises hiring a business manager, but more importantly, listening to him or her. Discipline, in this situation, can often mean the difference between going broke and securing your family’s finances for generations to come.
“Work with an independent financial advisor or Registered Investment Adviser to make the most of your money,” said Dan Larsen. “They will work with your trustee, your CPA, and your attorney to help you get the most out of your winnings.”
4. Learn to Say No
Lottery winners are nearly always hounded by family, friends and long-lost acquaintances that happen to show up around the time you win $500 million. Many lotto winners are then put in a position to pass it forward, or play it safe.
“Prepare for and learn to say no,” said Bob Williams. That powerful two-letter word can put helpful boundaries on what you’re willing to do for friends and family.
You don’t have to burn all your bridges, but you should be able to set clear, communicated financial rules for yourself and those around you.
5. Enjoy Your Wealth
You’ve just won $500 million – what’s with all the rules? It’s time to have fun. Go on a vacation. Do something you’d never be able to afford otherwise. Buy something unnecessary.
But keep it modest. Because most lottery winners aren’t used to the work that went into earning millions, they often don’t have the financial skills needed to successfully manage that much.
Nicole Wright offers a good suggestion. “If you’re bad with money, set up a system that provides you with a daily, weekly or monthly stipend.” This can help you structure your spending to make your earnings last over time.
6. Revisit Your Plans
“Set up a time – say, every six months – to reevaluate your plan,” said Shay Olivarria. “Make sure that you are on-target for your bigger plan, and that there are no holes in your financial ship.”
William Pitney notes that the longer you have your money can also affect your future plans. Checking up frequently on your long-term goals – getting rid of credit card debt, making the right investments – can help winners “make adjustments as they gain a better grip on the realities of their new life.”
7. Share the Wealth (Or Don’t)
Chances are good that you’ll have disposable income at this point, and donating to charity can be a great way to cope with your financial overabundance, and it’s also a great way to ease your tax burden.
If you’re passionate about any particular cause, consider donating to nonprofits, or even starting a trust, scholarship or grant in your name.
You can also set up your will and trust so that the wealth you leave behind is given to charitable organizations.
“I’d donate the majority of money to charity when I had died – I’d have the most to leave at the end of my life,” said social media and Internet analyst Brad Hines.
8. Leave a Legacy
If you’re lucky enough to win the lottery, and further beat the odds by making it last, you’ll join an elite group of no-nonsense winners who made the most of their opportunity. This is the chance to leave your legacy, whether it’s financial, personal or otherwise.
“I’d leave enough to my family to make them comfortable and secure, and that is all,” said Hines. “Think Warren Buffet.”
The security of your family,your children and even their own is often enough motivation to properly manage your money. But even if your only goal is to not lose your once-in-a-lifetime chance, that’s still a noble endeavor.
Invest your time and money wisely and you’ll be one of the few who’ve escaped the fate that’s besieged so many lottery winners before you.
“Like a Thanksgiving feast with eyes bigger than your stomach, if you bite off more than you can chew you’ll regret it,” said Nicole Wright. “Winning the lottery isn’t a payday, and money can drain just as quickly as flood. – create a plan that nourishes and sustains you and your family for now and the future.”