You jump off your couch and scream as the last lottery number is read aloud. You’ve won the big jackpot! Now you’ll never have to worry about money again.
You can start a new life in a better home and trade in your old car. Take a deep breath and weigh your options. While you can drop everything, those winnings won’t support you forever if you’re not smart with them.
This being said, you’re probably wondering, “what do I do if I win the lottery then”? Check out this guide to learn how to invest your winnings the right way.
Stay Quiet About Your Winnings if You Can
We know when you win the lottery, you want to scream it from the top of your lungs. Do what you can to reel it in. You want to stay anonymous if at all possible.
The second you tell people that you’re rich, you’ll start getting tons of calls from distant family members. Everyone will want to borrow money from you.
Some states won’t let you stay quiet about your winnings. They put it on the public record for anyone and their mom to see. Others will allow you to set up a trust so your lawyer can claim the money for you.
Find out how your state does things so you can be prepared to handle any phone calls that are thrown your way, or go ahead and set up the trust.
Hire a Team
You have a while to claim your prize. Instead of rushing into things right away, take the time to hire a team of people who can help you.
First things first, you’re going to need someone who can give you money advice. You can choose a financial advisor who earns a commission or one that works off of a flat-fee. The latter is the better choice.
You give them one lump sum of money for their expert financial advice. They’ll be more likely to give you information that will actually help you. The ones that are commission-based get more money for selling expensive investment products that you don’t need.
The next person on this list is an accountant. You see, you won’t be able to keep all your winnings. Some of the money will have to go toward taxes. An accountant will help you plan for this.
The last member of your team should be a lawyer. When you win the lottery, people will try to drudge up the past and sue you. The lawyer will help handle these annoyances as they pop up.
They can also assist you with creating a will and any other estate planning stuff. This way, your family is well taken care of after you pass on.
Lump-Sum or Annuities?
One of the first things your team will ask you is if you want the money in a single lump sum or if you want it via annuities. Lump-sum is as it sounds. You’ll get all the money at once.
The downside of getting the money as a lump sum is that you’ll have to pay all the taxes on it right then and there. You get a little more wiggle room with annuities.
With annuities, you’re given a set amount of money each year. You only have to pay taxes on it as it comes to you. Receiving payments makes it easier to create a budget, too.
You can also sell your annuities later via structured settlement if worse comes to worst and you burn through all your money. You can go here to learn more about structured settlements and how they work.
Don’t Make Huge Life Changes Yet
On the long list of what to do if you win the lottery, one of the most important things is to control yourself. You may be tempted to quit your day job, move into a huge home, and buy six cars.
This is a good way to burn through all your money. While you don’t have to keep the 9-5 job that you hate, you should at least continue working part-time.
If you’ve always wanted to move out of your home, go ahead. Get something modest in a location that you love. You don’t need a huge mansion.
Want a new car? Get a new car. There are plenty of budget models on the market.
Putting Your Money in the Bank
There are plenty of banks that handle lottery winners’ money. Even so, you don’t want to show up with the entire check amount in your hand. For one, that’s a good way to get robbed.
For two, most financial institutions can’t hold quite that much. Call your bank ahead of time and find out how they can help you. In many cases, you’ll have to spread your winnings across multiple banks.
Create a Charity Plan
The taxes on your money can get pretty painful. You can take away from some of this pain by giving a portion of your winnings to a charity of your choice.
You’ll be able to deduct it when you’re filling out your taxes, which can save you some money. If you can’t choose a charity to give to, you can always set up your own foundation as well.
Still, Asking Yourself What to Do if I Win the Lottery?
As soon as you win it big, it’s easy to go out and buy a bunch of cars and a huge home. Before you go on a spending spree, sit back and ask yourself, “what to do if I win the lottery”?
You’ll need to hire a team of financial advisors and lawyers, creating a charity plan can cover you a little when tax time comes around, and even if you have a bunch of money now, it’s a good idea to make a budget. Without taking these steps, you may burn through your cash as fast as you got it.
Are you looking for more financial advice that will help you spend your earnings carefully? Check out our blog daily for all the latest savings tips and tricks.