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What to do After Winning the Lottery
The excitement the thrill: You have the golden ticket, what now?
Winning the lottery is so exciting all those financial opportunities spring to mind; all those things you said you'd buy if you ever had the money. The boat, with room to fish and for her to have champagne and strawberries. The bigger house, with spa, pool, bungalow, 3 bathrooms so the kids don't have to share, the double sink in the master en suite. Oh and an investment house, whilst your at you wanted to pay off your parents house or the kids houses.
A holiday, a cruise, 6 months around the world, in luxury. Not slumming it, in hostels, or staying with relatives you didn't know you had, like you did between college and high school.
A nice new top of the line Lamborghini for Monday driving, a Maserati for Tuesday driving, Ferrari for Wednesday driving, Cult Classic Car, the Delorian from back to the future for Thursday's and one day you might invent time travel. Friday's the Rolls Royce.
Add a cleaner, a dog walker, a personal trainer and a driver.
Going out to the best restaurants, shows and other entertainment.
Adding to the liquor cabinent, with the best of the ranges you ever wanted to drink or tried, joining the wine club, joining the country club, quitting work to fit in all the activities you always wanted to do and now have the time and money to do.
The tales of woe: There are those who wished they'd never won the lottery
There is a many a whisper about those who have won the lottery who a couple of years later, are on current affairs shows saying how they lost everything, living back with family friends after lasting maybe 5 years living the life described above.
Is the lottery cursed? Is there no way to ever make it? Plenty of people have money, and they keep it, what is the catch with the lottery?
One of the problems with winning the lottery is the lack of income to support the ongoing, generally increased costs which along with the top of the line ticket items, particularly if you manage to spend most of it and think you can live off a small percentage of it for the rest of your life.
Electricity this may be higher due to more square meters, to heat and cool, lighting, may need brighter bulbs drawing more energy.
Gas again different appliances, more space to warm up, or water heating systems, may increase the ongoing costs.
Property Taxes (Rates): These may be increased based on what is your house, for example some taxes are raised due to how many toilets, how much property is worth, this is dependent and this you will be informed of at the time of purchasing the house however is generally taken care of in the initial amount.
Insurance: On a bigger fancier house is increased, is dependent on security systems generally, the cost of the house, and mortgage (if there is one).
Pool maintenance: The cleaning chemicals, the pump, the filters, and the pool cleaner.(Spa maintenance)
Now you have a Gardner cook, cleaner, pool cleaner, dog walker, nanny, you are an employer - what are the obligations?
This is an important question to find out the answer to.
Do you have to have another type of insurance, public liability?
Do you need to pay for sick leave/annual leave
What tax implications does this have?
Are you using a recruitment agency, what are the fees, or how much is the advertising fee?
Things to consider:
Property taxes (or rates)
Tax on incoming rent
Maintenance (Your rights and responsibilities as a landlord to provide livable conditions)
Real Estate Fees
Are you buying it outright or with a mortgage - check with your financial adviser which is better.
There is never just one holiday, and once the travel bug bites you, you will want to keep jet setting. However make sure you are aware of all the taxes required of you and travel smart, get to know your destinations. You could end up spend money you a) didn't realise was required to be spent, b) don't have to spend.
Travel insurance is always a wise decision.
Is the registration higher when you get a car that is considered a luxury item? Something to check the with governing body, of the roads. Also it has some impact on the initial registration how much the car costed.
Petrol/Gas, is it a guzzler?
Maintainance, are the parts easy to come by, is the mechanic maintaining it affordable?
Car insurance increases depending on a number of factors, make, model, is the car garaged?
There is tax associated with the interest earned on the winnings from the lottery, in most countries.
It is very important to take note of the tax implications in the purchases and investments you hope to make through the lottery money so as to give yourself a realistic view on the money you have and can spend and how much you have to give the government.
New golf clubs, new dresses (you don't want to do a Marge Simpson and keep recreating a dress), new suits to attend the charity events you pay a lot of money to attend, but its a must attend event of the season. Also spending time with people who have money generally leads to finding more activities in which to spend more money on.
How to not bankrupt yourself after winning the Lottery
Seek financial advice, you don't need to give them your bank account details (in fact don't give them out).
Do find out how to live your dream, it may take a little more time than you first considered, however as with everything this is another learning experience to give yourself the time adjust and learn as much as you can about the implications.
Another way to learn to manage the money is to put it in a high interest earning account, which pays out the amount earned in interest, to the spending account (like a salary, take out the amount for tax and return it back in the high interest savings account).
Investing in Cash or Currency is not high earning however it is least risky, although it may pay to invest a large portion of winnings in to a long term solid stable stocks, which you research well as they are more likely to give better returns on your money over a long term. This is something which you need to research and seek advice if you have not looked in to the share market before.
Save up (Yes you need to save) for the things you want and buy them as you can, add the money in to the budget. (Yes you need to budget even if you won the $1 billion dollar lottery).
The potential for earning high interest and lots of money on the amount described in the golden ticket section, is great and as you begin to save/spend this money, adjusting your budget, and growing your understanding in the financial world can prevent you from being another tragic lottery story.
The readers digest version:
-Get Financial Advice
- Invest wisely
- Keep your head
- Be realistic
- Be inquisitive
- Get facts (particularly about tax, associated ongoing costs)
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