Sometimes, we all dream to win a lottery. Some people have tried playing it with the hope of amassing a huge amount of money. However, few people, if any are actually prepared in case they get lucky.
So, what if you won the lottery today, what will you do with the money? How will you handle your new status? Once you win the lottery, you will have many friends with different kinds of advice. Some may be sound while others may be totally off the hook. If you are not careful, you might end up being unlucky on your lucky day. With that in mind, it is good to be prepared. Read on for insight into what to do with the money if you win a lottery.
What to Do Before Claiming the Prize
- Protect the Winning Lottery Ticket
The first thing you need to do is protecting your lottery winning ticket by signing it. The ticket is like a bearer instrument and anybody that signs it can claim the prize. So what if you lose an unsigned ticket and somebody finds it? Your guess is as good as mine. Make hard and soft copies of the ticket and keep the original one in a safe place. You can take it to the bank, and have it stored in a safe deposit box. All this is to protect your winning lottery ticket.
- Go Unlisted and Stay Anonymous
Once you win the lottery, if your state allows it, stay anonymous. Once people hear that you have won such a big prize, they are going to try contacting you. Change your number to an unlisted one and get a new post office box. Check what your state regulations are regarding anonymity when one wins a lottery. If allowed, do not hesitate.
- Do not Tell People or Change Anything
When people win the lottery, they are full of excitement, and we can excuse them for telling and ragging to everyone. Do not announce to anyone, not even to your boss or family members. You do not want word spreading out that you have won, only to be kidnapped and held for ransom, or for your relatives to present to you their investment ideas before you have had enough time to weigh your options. You can only contact the lottery authorities. Give yourself enough time for the media to calm down and take a break to relax and plan your future. Most lotteries give winners enough time before claiming their prize. Do not be in a hurry.
Still, on this, do not change anything just yet. Do not quit your job yet. It is still early. For the meantime, do not engage in an expensive lifestyle that you were not used to before you plan what you want to do with the money. It is common to see someone winning some money and the next day you see them with an expensive new car, expensive clothes and so on. This will call for unnecessary attention, which you may not be ready to handle just yet.
Your financial life is going to be complex. You need to surround yourself with professionals including a well-versed financial advisor, attorney and tax advisors. They will come in handy as you get into your newly acquired status of large wealth. However, always sign the checks yourself. If you are not comfortable with any advice given, you can always go for a second opinion.
Claiming the Prize
Once you win the jackpot, you should know your payment options. You can either receive your prize as a lump sum or as an annual payment spread out through a period of 20 to 30 years. Before choosing a payment option, consider the value of money, the amount you can get under each scenario. If you take the lump sum, you can pay yourself an annuity and invest the excess cash flow. This means you will have more money to invest.
If you take the long-term payout, you will receive a full amount of the lottery, but it will be spread over the set period of 20 to 30 years. With the long-term payment, you are guaranteed of long-term cash flow, fewer taxes, and most importantly, there is no chance of blowing your winnings all at once.
Overall, you will need to compare the tax proceeds and the ROI of each option. At this stage, you already have professional financial advisors to take you through what is best in your specific case.
What to Do After Claiming the Prize
You have taken the precautions above and finally decided how you want to be paid. Finally, you have the money at your disposal. What are going to do with it or how do you spend it?
- Pay off Your Existing Debts
It is time to simplify your life financially. Pay off your debts. If you have leftover student loans, mortgage, auto loans, or credit cards, clear them off. You may want to consult your hired experts on how to go about paying the debts because when you have more money, you are put in a higher tax bracket. However, the bottom line is clearing them off and living an easy life.
- Set Aside Some Money for Retirement
You can set aside a certain percentage of your winnings in a retirement account. This way you will not hit 80 only to find that you spent all your money and you have to go back to work.
- Donate To Charities
You have enough money to last you a lifetime if you plan well. It could not cost you a thing if you donate to a charity. You can help the less fortunate in society. In addition, when you give to charity, the donation is deducted from your taxes.
- Start an Emergency Fund
It is common to see millionaires running into financial problems. With your lottery prize, you can set up an emergency fund to cover you in case of future uncertainties. Put aside enough money to cover your expenses for six months at least.
- Set up College Funds
If you have kids, or you would .like to sponsor some kids to school, you can set up a college fund for them with a portion of your prize-winning.
- Watch Your Spending and Learn To Say Know
When you win the lottery, many people will approach you. Some want you to fund their projects, lend them money, or even assist in their needy situation. You cannot help everyone, and you are going to have to say no sometimes. In any case, you have your consultants to help when making major financial decisions.
Do not change your spending habits drastically. You have a lot of money at your disposal but it can all go away at once. Yes, your lifestyle is going to change but always stick to a budget. Always make use of your hired team. With this kind of wealth, you are going to need all the help that they can offer; otherwise, you may go bankrupt within a few years.
If you are playing the lottery with the hope of winning, or you have already won, the above guide will come in handy to help you plan your fortune, make good use of it and benefit for a lifetime.
