Winning the lottery seems to have replaced years of hard work for a comfortable life as the new version of the American Dream. Playing the lottery gives people the dream of becoming filthy rich overnight, and that is a lot more exciting than hard work year after year and having to save along the way. The media and politicians keep telling you over and over that your parents had it better, and they keep convincing you that it’s too hard to succeed and get ahead just from work and savings.
Now there is a whopping sum of $502 million up for grabs in two different lottery drawings in the coming days. The Powerball lottery drawing for Saturday, June 18 has an estimates annuity value of $169 million, or $114.2 million for a cash option. The Mega Millions drawing for June 21 has now risen to $333 million in annuity value, or up to $226 million as the cash option.
Can you imagine winning a large portion of $502 million? Perhaps the real question that matters is what lottery players should do — or really what they should not do — if they win. The next lottery winner better understand that they better be responsible and give their new life some serious thought.
A theme you will keep hearing is that newly attained wealth comes with the need for extreme responsibility. Sadly, many lottery winners (or those who come into lots unexpected money) never seem to have read that memo. The really sad part of this is that many lottery winners end up absolutely 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. This is 12 things not to do if you win the lottery.
Maybe it seems hard to imagine that you could blow through $100 million, $200 million or even $300 million very fast. The reality is that any amount of wealth can be blown through in rather short order. The newly rich 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. One consideration is that vast money almost certainly will have an impact on your family relationships and friendships. Signing the winning lottery ticket and reporting it to the state is a must. Before you run out and brag to everyone you know, hold back on that urge. You will need immediate financial advice and tax advice. And hear this loud and clear: you absolutely need to live on a budget! Bankrolling your family and friends on everything can send you to the poorhouse rather quickly. Do you know everything about business now that you are rich? If all these points sound silly, then you should understand one thing right now: you are a prime candidate to go from riches back to rags.
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 your answer is yes, then you probably didn’t even play the lottery.
Private jets, mega-yachts, mega-mansions, private islands, fourth and fifth homes, keeping an entourage, holding private concerts, buying endless jewelry or arts and collectibles: these are all fun, but they add up to endless money really quickly. Most of these things come with ongoing maintenance, staff, taxes, insurance and other obligations and headaches. Any combination of those could blow through $200 million or $300 million rapidly. Now consider that at least two lottery winners have been murdered in recent years. They could have avoided that had they handled their winning properly.
Hopefully this tough love case of reality 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 $200 million, $300 million or more. 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.