Maintaining Control After Winning the Lottery
Although this probably isn’t the type of thing you want to hear right now…
The Bad News
Without proper guidance, people tend to get themselves into all sorts of trouble after winning the lottery. In fact, even the lowest estimates calculate that over 30% of lottery winners end up going bankrupt, and recent studies show that within five years of winning the lottery, big jackpot winners are just as likely to file for bankruptcy as winners of small amounts.* This can be a result of shortsighted spending habits, complications from winning with a group, lawsuits, divorces, gambling addictions and/or drugs.
One thing you can do right away to set more realistic financial expectations is to use a lottery tax calculator to determine how much of that jackpot you will actually get to take home.
But even if you are able to avoid financial trouble, winning the lottery can still create a huge emotional strain on you and those around you including feelings of resentment, entitlement, guilt, isolation, and depression. If you wanted to, you could probably spend weeks reading stories about lottery winners who have had their lives destroyed.
The Good News
The purpose of this article is not to bum you out at an exciting time in your life, it is simply to warn you of potential hazards and emphasize how important it is to stay level-headed. Luckily, you can learn how to deal with many of the problems lottery winners commonly face and even prevent them in many cases.
Firstly, you’ll want to find lottery lawyers, financial advisors, and anybody else who is going to be able to help keep you out of legal and/or tax trouble. Remember that an ounce of prevention is worth a pound of cure.
Next, begin planning for your future, and start to figure out what truly brings you lasting happiness. More specifically, concentrate on things you want to do rather than getting too caught up in the things you want to buy. Now that your financial situation has completely changed, you may be surprised to learn just how quickly you get used to having fancy things. So instead, try to be honest with yourself, and pick out some fulfilling activities you could see yourself happily doing every day.
Finally, come up with a game plan and try not to go overboard with anything before you’ve had enough time to properly evaluate the long-term effects. Of course, it can often be great to try new things, but just keep in mind that money is simply a tool we use to get the things we want. And if you spend it all on something you’re not going to care about in a few weeks, months, or even years, then you’re not really using that tool very well.