The American Dream has changed over the years. It used to be a life of hard work and saving your way to wealth. The American Dream of today seems to be winning the lottery. After all, the media keeps telling you that making money the old-fashioned way, with hard work, some good luck and a life of being responsible, just feels too difficult for most people to accomplish. But the notion of paying a few bucks and becoming instantly rich is very alluring. After all, becoming filthy rich overnight sure sounds better than a life of hard work.
The Powerball for Wednesday, February 22, 2017, has reached an estimated annuity value of $403 million, or an estimated cash value of $243.9 million. Whether the winner chooses the annuity or lump sum, the truth is that this will generate multi-generational empire money.
The unfortunate reality is that most people never get a dime out of the lottery versus a lifetime of hard work and responsibility. Many lottery winners and people who come into unexpected instant wealth end up broke and in the poorhouse.
What anyone with ambitions of playing and winning the lottery must understand is that there is a much more serious side to the lottery. It’s easy to think about how to use that fortune and all it can buy, but instant extreme wealth of this nature comes with the price of needing extreme responsibility.
24/7 Wall St. has tracked many lottery drawings over the years, and we have created a self-help guide of 12 Things Not to Do If You Win the Lottery. Again, it is just too easy in these times to go broke. One key life lesson for the newly rich needs to be shared by those who have had wealth for years or generations: You should only have to become rich once!
Multi-millionaires and billionaires know that even they have to live within some means. This may seem hard to fathom, but blowing through $100 million, $200 million or even $400 million is much easier than you would probably think. In some cases, those newly rich lottery winners end up broke in a very short time.
Many pitfalls await lottery winners and they threaten instant losses — or worse. Those pitfalls are above and beyond deciding whether to take the lump-sum cash payment or take a payout over 20 years. Most lottery winners choose the lump-sum payment and that means all of their winnings can be lost in short order rather than as the money comes in over time.
Lottery winners and anyone else who comes into sudden wealth must consider how a boatload of money can affect their family and relationships. Will they work or just live the easy life of luxury for the rest of their days?
Several things have to take place in a very short period for lottery winners. They need to sign the winning lottery ticket and report it to the state, and they better rethink running out and bragging to everyone. Here is a fact that all lottery winners need to pay attention to: winning the lottery could put your life in jeopardy!
Lining up a solid financial advisor and getting ongoing tax and structure advice are of the utmost importance. Before dismissing the notion of outside help and guidance, ask yourself if you know about alternative investment vehicles outside of stocks and bonds. Have you ever heard of kidnap and ransom insurance? Do you understand family trusts?
After winning the lottery, life changes drastically, but knowing the limitations has to be part of a daily routine. Thinking that you can live without a budget is a major pitfall. After all, how do so many people go broke after winning the lottery, even with all the warnings signs?
The 1980s film “Brewster’s Millions” may have made it seem impossible to blow $30 million in 30 days. That was then — now that can be blown in days or hours without even being that creative. The ongoing costs of private jets, mega-yachts, private islands, mega-mansions, luxury cars, extravagant parties, private concerts, buying luxury goods or art and collectibles, and having an entourage add up quickly. These may sound great at the time, but only until you honestly factor in the ongoing costs for a lifetime of that. Any combination of those could go over $100 million, or even $500 million, again without even being that creative.
24/7 Wall St. does not want to see any lottery winner go broke. Here are the 12 things not to do for any lucky lottery winner. Again, you should only need to get rich once!