5. Do not let your old life’s obligations and debts remain in place.
If you are like the rest of the population, you probably have some debt and have financial obligations. Do not let the woes of your old life carry forward if you become filthy rich in an instant. If you suddenly become wealthy, get rid of your old financial obligations and debts — and do it now! If you think that “I’m rich and don’t have to pay anymore” might be a fun way to live your life, you are already well on your way to wrecking your new life. Whether you take the lump-sum or the annuity option, if you have a single penny of debt in the immediate future and distant future, then something is seriously wrong with you. For that matter, you should not have a single debt ever again!
One lottery winner in California was reportedly strapped with debt from property purchases. Does that sound stupid, or what?
Now imagine if you manage to go broke down the road and still somehow have a mortgage, car payments, student loans, credit card debt and personal bills. Do you think for an instant that your friends and family members will not ridicule you every day for the rest of your life?
6. Do not live the big life, at least not way too big.
You can spend as much money as you want. That is the misconception that many people who never had real money have when they become rich overnight. Thinking this way will wipe you and your assets out. There are many temptations awaiting those with what seem like endless avenues of riches. If you go from living a simple life to instantly being able to spend hundreds of thousands of dollars (or more) per week, what do you think happens to your expectations in life ahead? Chances are high that you will want more of the same.
If you start gambling in Las Vegas and are not happy until you are gambling with hundreds of thousands of dollars (or more) per play, you are dooming yourself. Now just wait until the real con men find you. Taking you and your favorite 500 people on a luxury cruise around the world can become very expensive, very fast. Having an entourage generally only works for people who keep making more and more money – and they usually end up broke for that cost.
7. Don’t run out and buy everything for everyone (not even for yourself).
Many people have at least a mental list of things they say they would like to own if money was no barrier. Buying nice things can be fun. It can even create a rush for some people. Now imagine getting to buy whatever your imagination can think of: Rolls Royce, Jaguar, Range Rover … mansions, fur coats, private planes, islands. Now, let’s take a breather for a moment.
Society and the endless commercials often trick people into thinking that they need to own endless amounts of new things. It’s just stuff! Do not go out and buy dozens of cars. Do not go buy multiple houses. Do not run out and buy things endlessly for friends and family members (nor for yourself). This will put you on a bad path if you do not avoid the impulse buying. Do you really want to be your friends and family personal welfare department?
If you start buying everything for everyone, chances are high that they might expect that to last forever. The other end of the story is that you do not have to be a cheapskate either. Still, after hearing a real life personal story of one lucky winner buying more than 30 cars and multiple houses in three months it is just crazy.
8. Do not think that budgets are not just for the poor or the middle class.
Even billionaires know that they have financial limitations. The self-made billionaires for a reason, and the families that inherit it try to do what they can to maintain it. Maybe it sounds silly that you might need a budget and might need to consider limitations if you have $50 million, $100 million, or $200 million to burn through. The reality is that creating a budget and sticking to that budget are not just menial tasks for the poor and the middle class.
The truth is that those who are very wealthy, at least those who stay that way, know that a vast fortune can literally vaporize if not handled properly. Major lottery winners generally become wealthier in an instant than everyone else they know combined. This also goes back to having advisors and being prudent, but at the end of the day you do still have a finite sum of money. Chances are very high that you will make some serious purchases and your lifestyle will be changed forever.
Not learning your limits and not setting limits for yourself will lead to a personal disaster. Again, many lottery winners go broke. If they went broke in a very short time, what do you think the reflection about wishing for a proper budget would be? In short: Do not think you don’t need a budget!