You Hit the Jackpot! (Now What?)
What would you do if you won the lottery or received a large inheritance? When we watch the lottery swell into the hundreds of millions of dollars, it’s hard not to fantasize about winning . . . but maybe that’s just me! Here are my top five things to do if you experience a large influx of cash:
1. Shhhh! Don’t talk about it! This is the hardest one on the list. You’ll need to keep quiet while you put your financial, legal and tax plans in place. Keep a small circle of people who know about your situation. Once the word gets out, you’ll be inundated with unsolicited advice and pleas for money.
2. Do nothing. Give yourself a couple of weeks to adjust to your new reality.
3. Get professional advice. You were expecting this one, right? Depending on the situation, you will want advice from at least three professionals: a financial planner, a CPA, and an attorney (and, perhaps, more than one type of attorney). A very large amount of money might require planning beyond the skills of your current advisers. Also, don’t go it alone. Take a trusted friend or family member to your meetings.
4. Decide what you want to accomplish with the money. Going out to dinner every night might get boring after a while. If you’ve received enough money to quit work, is that really what you want to do? Maybe a change of career is more appealing than doing nothing. If you are retired, there are many more things for you to consider, like how much money you want to spend on yourself versus give or leave to family, friends, and charities.
5. Take 10% of the money and spend it! Be lavish, extravagant and wasteful! What?! Okay, before you conclude that I’ve lost my mind . . . one of the biggest challenges people face when they receive a large sum of money is that they simply aren’t prepared. They don’t have the experience and skills to handle the big influx. This is why some lottery winners go broke within five years. Unless you have an unusual supply of willpower, you’d be better off following my 10% “blow it” step. Get the spending “out of your system.” If you win a million dollars, spend $100,000 and keep $900,000, rather than chipping away at the $1,000,000 until there’s nothing left. Oh, and by the way, if you’d like to do some financial planning on your way to collect your winnings, call 386-671-7526.