It is hard to argue against the notion that the new American Dream is winning the lottery. After all, that old American Dream of hard work and saving could take you a lifetime. On top of that, the media now keeps telling you that your parents’ generation just had better opportunities to succeed. Playing the lottery gives people the dream of becoming filthy rich overnight, just by luck and spending a few dollars.
There was a $5 million Mega Millions lottery winner in Texas on Friday, June 10, but the reality is that the massive $280 million Mega Millions lottery will roll to Tuesday, June 14, 2016, with an annuity value of $293 million since the so-called Megaplier did not get hit.
The question that many lottery players will ask is what they should do, or what they should not do, if they win a vast sum in the tens of millions or hundreds of millions of dollars. Lottery winners know that the cash value is discounted for a lump sum, down to $198 million in this upcoming Mega Millions drawing. Friday night’s lottery drawing was already the largest Mega Millions lottery since November of 2014. Whichever payment option the next winner chooses, they better be responsible and give this some serious thought.
Attaining an instant fortune that creates multi-generational wealth also comes with the need for extreme responsibility. Many lottery winners, and many of those who come into unexpected money, never seem to have read that memo. Many lottery winners end up broke, some in just a few years.
24/7 Wall St. has tracked many lottery winnings over the years, and we have come up with a self-help guide of 12 things not to do if you win the lottery. It has to seem hard to imagine that you could blow through almost $200 million very fast. But think about it when you back out taxes (at the highest rate of course), then think about buying a few things and settling up your past life’s messes. If you are not careful, you could end up back in the poor house.
The newly wealthy need to keep one adage in mind that “old money” has known for generations: You should only have to become rich once!
There are many pitfalls waiting for unprepared lottery winners. Again, extreme wealth comes with extreme responsibility. Instant wealth can and almost certainly will have an impact on your family relationships and friendships. Several things need to be done by lottery winners, above and beyond signing the winning lottery ticket and reporting it to the state.
You might want to run out and brag to everyone you know, and you might think you have all the time to worry about financial advice and tax advice. Living on a budget may seem silly — after all you’re rich! Maybe you want to bankroll your family and friends on every need and desire. And maybe you think you know everything about business now that you are rich. If very much of this sounds right up your alley, please take it to heart right here and right now — you are a prime candidate to go from riches back to rags.
Some pitfalls are very hard to avoid. Family and friends can create enormous pressure. Temptation to live the high life is hard to avoid. After all, all those commercials and programs showing the excesses of the wealthy sure are tempting. If you have the need to do these, you are already on the road from becoming instantly wealthy back to the poor house.
Do you know the world of high finance outside of stocks and bonds? Do you know about investing tax-efficiently and about structuring your finances for decades? If the answer is yes, then you probably didn’t even play the lottery.
The thought of owning private jets, mega-yachts, mega-mansions, private islands, multiple homes, of having an entourage, holding private concerts, buying endless jewelry, buying art and collectibles, have to all sound fun. Reality check. These all add up to endless money really quickly. Many of those things come with ongoing maintenance, staff and even ongoing taxes and insurance. Any combination of those could hit close to $200 million rapidly.
These are just some of the pitfalls that a lottery winner will have to consider. Now consider that at least two lottery winners have been murdered in recent years over their winnings. Frankly, they could have avoided that — and it’s hard to find people who want to be murdered over money (or much of else).
Hopefully the reality scenario is setting in. The whole point of 12 things not to do if you win the lottery is that you can quite easily blow through almost $200 million. 24/7 Wall St. does not want to see any lottery winner go broke. Again, you should only need to get rich once!
Here are the 12 things not to do if you win the lottery.