People often spend some spare money to buy a lottery ticket or two at the gas station. The chances are pretty low buy many have suddenly experienced a windfall of millions from a sudden lottery win. Even if you don’t hit the big prizes, a few hundred thousand dollars can still be a lot of money. However, lottery winners often have poor skills in managing their money. Research suggests that lottery winners are more likely to file for bankruptcy than non-winners. This stems from the fact that they make terrible decisions with their winnings. If you don’t want to be a statistic, here are some tips on what you should be doing with that money. These tips should also be applicable any time you get a large amount of money.
Pay Off All The Taxes
What many people are not aware of when they win a lottery, or any big prize is that there are often taxes that need paying. You will be taking home less than what you won because of the taxes. This comes with a choice, though. Winners can either get their prize in a lump sum or a yearly payout. This is mainly for those who win millions, and the government will deduct taxes depending on their payout. The larger tax will be for the lump sum, but it does save your heirs from paying any estate tax if you die before the full yearly payout is done. Talk with a tax professional on what they think would be a good choice.
Eliminate All Your Debts
Once you receive the money, you should not start spending without reason. You will want to eliminate all of your existing liabilities first. For example, mortgage loans are the usual debts that people have since it is for buying a house. Instead of leaving it alone, you can pay it off completely. This means that you own your house free and clear.
Additionally, any loans like car loans and personal loans should also get paid. Outstanding bills also need payment. This ensures that you only have assets left. With the early payment of debts, you don’t have to worry about the interest.
Get A Team Together
Now that you have the money, it is time to organize it properly. There are three people that you need to see. First, you’ll want a lawyer. Any time you get a lot of money, it is always a good idea to work with a lawyer to discuss wills, trusts, and even prenuptial agreements. This ensures that you can protect your money or preserve it for your beneficiaries.
Next, you need to work with a financial advisor. Managing large amounts of money is more complicated than most people think. Hiring someone to advise you on where to put the money to get the best return is necessary. Find an advisor with a good reputation and has full certification to ensure you have the best working for you.
Finally, you’ll need an accountant. You need to figure out how much you can spend comfortably while also ensuring you pay all your taxes. An accountant can help with your budget as well as any investments you make so that you can maximize your earnings. They can also help outline a budget you can follow.
Stay Within A Budget
Even with all the money that you have, you should not go overboard with the spending. Many of the lottery millionaires that lost their winnings made bad purchases and spent too much money. If you want to be smart about your spending, you should work out a monthly budget and stay within it. It is also advisable to keep your job even with all the money you have. This ensures that you still have some money coming in.
Use It To Make Money
It takes money to make money. A sudden windfall could be an excellent opportunity to start your own business. Even if it is a low-key operation, as long as you are making a profit, you are putting your money to good use. There are several investment opportunities that you can do with a large amount of cash. One good choice is to buy properties and develop them for rent. This allows you to generate more income from your windfall. Other business opportunities can open up so that you can double or triple your assets.
Winning millions doesn’t mean that you are set for life. You can still easily lose it all if you are not careful. Be smart with the money, though, and you can expect to have no more worries for a long time.