What would you do if you won the lottery? The chances are good that the first answer you come up with wouldn’t be the best course of action.
It’d be tempting to quit your job, buy your dream car and house, and book an expensive vacation immediately upon winning. It’s those kinds of rash decisions, though, that can cause you to lose your fortunes, as 70 percent of those who suddenly get a large amount of cash do.
The first thing you should do after winning the lottery is … nothing. Take a deep breath, absorb the news and then take these steps to make sure you make the most of your winnings instead of ending up broke.
Secure Your Winnings
Whoever turns in the ticket gets the money, so the first thing you should do is lock your ticket in a safe or safe deposit box. Don’t even turn it in until you’ve created a plan of action. Once you do have a plan, you can sign the back of the ticket and claim your winnings.
Don’t worry too much about running out of time. Depending on where you live, you have typically between 180 days and a year to claim your money.
Stay Anonymous, if Possible
If you win a significant amount of cash and your name is out there, you’re going to have a lot of people showing up and asking you for money. If you’re OK with this pressure and relative fame, you can go public. Most experts, though, recommend staying anonymous.
In some states, you might not be allowed to stay anonymous, but if you can, it’s a smart idea. Sometimes, you can remain anonymous by setting up a limited liability company or trust to collect the money for you. The name of the trust or LLC will then be the official winner.
Get Your Team Together
Not that you’re a big shot, you’re going to need a team to help you figure out what to do with your newfound fortune. Assemble a team of lawyers and financial experts you can trust to help you navigate the complex tax, investment and legal issues that will come along with your winnings. It’s best to get this team together as soon as possible.
Create a Plan
Making decisions without a plan can land you in trouble, so it’s best not to make any big life changes within the first six months of winning. During this time, create a plan for what you’ll do with your money that includes a budget. Your financial team can help you with this.
Pay Off Your Debts
The best financial move you can make after winning the lotto is to pay off all your debts. Investments could turn out to be wins or losses, but getting rid of debts is a surefire way to increase your wealth. Pay of student loans, credit cards and any other debts you may have. Then, you can start figuring out to do with the rest.
Save
It might not be the most glamorous money move, but saving as much money as you can is another smart action you should take. Ideally, you want to save enough that you can live comfortably for the rest of your life no matter what happens. If you win the jackpot, which now often starts at around $40 million depending on where you live, doing so is most likely feasible.
Donate to Charity
As a lottery winner, you have the potential to make a significant impact by donating to charities. Doing so can also be a smart financial move, as it can afford you substantial tax breaks.
If you weren’t able to remain anonymous, you can expect to be hit with tons of requests for donations from charities. To avoid digging yourself into a financial hole, create a plan for your charitable giving — whether you’re anonymous or not.
Invest
You should also invest part of your fortune, but make sure you have a plan for doing so. You’ll likely receive a lot of requests for investments, but make sure you don’t overextend yourself.
Your financial advisers can help you create an investment plan that includes both relatively safe investments and some that are riskier but have the potential to bring in more earnings. How much of each you have will depend on your tolerance for risk, but be sure also to heed the advice of your advisers.
Of course, you can also have fun with some of your winnings. You can go on vacation, help out family members or buy yourself something nice. What you do with your money is up to you. Just make sure you have a plan in place and a capable team to help you.
Winning the lottery will change your life. Following tips such as those listed above will help you make sure it changes it for the better.
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Photo provided by the author.