When you pick those winning numbers and your ship has finally landed, please avoid the following 7 mistakes most lottery winners make.
1) They Think They’re Getting The Whole Check
Our favorite “Uncle Sam” will be there to claim 50% of the total winnings. A major miscalculation would be to plan on spending the entire amount. CPAs are vital in helping make sure that the IRS doesn’t get any more than what they are entitled to.
2) Fail To Retain Professional Advice
Winners should surround themselves with a team of advisors- Lawyer, CPA and a Financial Advisor. Do yourself a favor and get the team assembled before you collect your winnings. Your attorney will be able to create privacy and prepare an estate plan to minimize estate taxes. Lottery winners can be easy prey for the unscrupulous and with a plan prepared by their team of advisors they will be able to be set for life financially. Coming into a large amount of money can be liberating, but it can also cause a life of excess and foolish spending.
3) Give Up Their Current Lives
It seems that the most successful winners are the ones that maintain their current lifestyle. They keep their support system in place, they don’t change their friends and some even keep their job. The less change in lifestyle seems to create a more balanced life.
4) Don’t Have A Clue How Long The Money Will Last
A large amount of money will be gone before you know it if you don’t have a plan. A financial advisor will be able to show, in great detail how long the money will last, especially considering the NET proceeds.
5) All Of A Sudden, You Are Mr or Mrs Popular
After you win, you will have more friends and relatives than you never knew. The hardest thing to do will be to JUST SAY NO!
6) Crazy-Stupid Investments
With the size of recent winnings, it is not prudent to take excessive risk and make crazy investments. A reputable financial advisor will be able to structure a conservative portfolio that will be able to stand the volatility of markets and still generate a steady income stream.
7) Abandon Common Sense
There are a lot of very smart people that want to help, but at the end of the day, if it sounds TOO good to be true, it probably is. Lottery winners need to always keep in mind whose money it actually is.
Coming into a large amount of money can be very liberating. But it can and will cause problems that most never consider. But with proper planning and common sense, it can be life changing for the better.
“A large income is the best recipe for happiness I ever heard of.” ~Jane Austen