Everyone dreams of winning the lottery. Well, everyone who isn’t building a corporate empire or already a multi-millionaire, that is. We dream of big houses, fancy cars, first-class travel, no work and financial security for our children. But winning the lottery doesn’t always lead to happiness. In fact, it doesn’t always lead to financial freedom either. We look at what not to do if you want to keep your lottery winnings.
Indulge your addictions
We use the term addictions loosely here, although plenty of lottery winners have fallen prey to their more hardcore addictions. Basically you need to avoid all excesses. Some of the biggest lottery winners have lost their money to drugs, gambling, alcohol, sex and shopping.
- Michael Carroll won $15.5 million in the London lottery and spent it all drugs, gambling and prostitutes and now he lives on the dole.
- Evelyn Adams won the lottery twice and still managed to blow it all ($5.4 million) at casinos in Atlantic City. Her humble abode these days is a trailer.
- Gerald Muswagon won $10 million in Canada and spent it all living the high-life, which, in this case, translates in booze and parties. He’s now dead – suicide.
- Ibi Roncaiolo won $5 million in Canada and spent it all on alcohol and shopping – and her husband didn’t know. Unfortunately for Ibi, her husband was a doctor who used his knowledge to kill her with doses of anaesthetic.
- In 1961, Vivian Nicholson won the equivalent of about $4.8 million and spent it all on clothes. These days, she’s still penniless.
Say yes to everyone
Yeah, you want to help out your family and friends. Sure, you want to donate to your favourite charities. But you need to draw a line, unlike these people:
- Billy Bob Harrell Jr. won $31 million in Texas and after a spot of self-indulgence managed to give away the bulk of his fortune to anyone who asked, to the point where his wife left him and he felt the only way out was to kill himself.
- Janite Lee won $18 million dollars and proved that she had a complete inability to say no when she filed for bankruptcy within eight years.
- Ken Proxmire won a measly $1 million but that didn’t stop him from agreeing to invest in a business with his brothers – a business that went belly up. Proxmire has since returned to his blue collar job.
Tips to keep your winnings
It doesn’t have to be doom and gloom. You can have your money and keep it.
- The first thing you should do when you’ve found out that you’re a big winner is phone an accountant and financial advisor. You’ll need to know exactly how much you’re going to walk away with after tax (it can sometimes be only a third of the winning amount) and you’ll need someone to help you invest it wisely. Proper investing can lessen your tax burden and will make your money work for you with lovely interest rates.
- Don’t invest it all. Keep some silly money aside. Depending on your winnings, silly money could total a couple of million dollars. Buy a new house and car, buy your mom a house, set up a college fund for your kids with all the money they’ll need for four years’ of studying – plus living expenses and pocket money. Donate to some charities. Travel a bit. But do it all within reason. (Your financial advisor will let you know what reason is.)
- For goodness sake don’t tell everyone. If you make any big announcements or pose for front page photos you will be inundated with requests. Family you didn’t know you had will approach you for loans, people at work will start dropping heavy hints about excellent investments and new business prospects and charities you never heard of will play on your guilt.
- Don’t quit your job immediately. Take some time to think about what you really want to do. Some winners quit only to go back a short time later because they’re bored. You also want to see if your investments are going to pay off, especially once all that tax has been deducted.
- You may find that you need to take some time off to escape the begging crowds but you might want to return later, so make the appropriate arrangements.
Winning the lottery can be all that you dreamt it would be; provided you have the wherewithal and savvy to live within your newfound means.
This guest post was written by Sandy Cosser on behalf Now Learning, which promotes higher education opportunities in Australia, such as online courses so that you can manage your personal finances, even if you don’t win big on the lotto.