7. Do not run out and buy everything for yourself and others.
Everyone probably has a list of things they would love to own. Buying nice things is fun. It can even create a rush for some people. Now imagine getting to buy whatever your imagination can think of. Now take a breath for a second.
Society and the endless commercials trick the public into thinking they need to own endless amounts of 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 you no longer need a budget.
This may seem silly on the surface that you might need a budget and might need to consider limitations. The harsh reality is that creating a budget and actually living on a budget are not just tasks for the poor and the middle class. The very wealthy, at least those who stay that way, know that even a vast sum of money can vaporize. Major lottery winners generally become wealthier in an instant than everyone 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.
Without setting limits for yourself and for what you do with others is a recipe for 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!
9. Do not become your friends’ and family’s business backer.
Being in venture capital or private equity might sound enticing. If you knew little about money or finance yesterday, what makes you think you will understand venture capital or merchant banking now? It may sound powerful. Do not fall into this trap. One common theme that has come up with lottery winners who suddenly get vast sums of cash is that their friends and family start pitching them on endless business ideas. Sure, some will sound great and some will sound crazy. This could expose you to more than just a loss. You could end up with endless liabilities in some cases.
If someone has no knowledge of a particular business and does not know what it takes to actually run a business, will they do better because a lottery winner who lucked into vast wealth gave them money to start it? If your answer is yes, you seriously need to protect yourself (from yourself).
10. Do not give your fortune away immediately.
One thing that has hurt those who come into instant wealth is falling into a trap thinking that they need to immediately share their newfound wealth for the greater good. It actually sounds quite nice to give away vast amounts of cash to charity or to religious institutions. This might not be the case for everyone, but giving away an entire fortune or a large part of it to your religious institution or charity needs to be given great consideration. You can be generous without doing the unthinkable. Rather than giving everything away now, the charitable trend of the extremely rich now is to plan for how to give the money away upon their death, while still often leaving some for their heirs.
Imagine what you will feel like down the road when a serious crisis arises in your life or your family’s life, knowing that you no longer had the means to change it. Should you be charitable? Absolutely! Should you give it all away? Absolutely not!
11. Do not dare get athlete envy or celebrity envy.
Many movie stars, entertainers, and athletes live a life of extreme luxury. It may even be almost too hard to imagine (almost). Lottery money gives a winner the chance to live like the lucky few, and comes with pitfalls that can make them go broke. Keeping up with the Joneses is bad enough. Trying to keep up with the Kardashians or other celebrities is a recipe for disaster. It has to seem cool to own a 200-foot yacht. It may seem practical that certain celebrities have an entourage, or to have a film crew following you around. It may seem cool owning castles in Europe. Owning an original Picasso painting sure sounds impressive.
Having a big new private jet makes sense for a lot of people. Trying to dodge taxes might even sound appealing to misguided people. Now go add up the price tags of these things, plus the cool cars and houses and the rest of it. You can go broke really quickly. Just ask actors and athletes who did this how they feel now.
12. Don’t think that laws or decency standards no longer matter.
Some people think the rich can do whatever they want without consequences. It is true that the wealthier you get, the more high-class trouble you can find. It is also true that the rich can afford better attorneys and legal defense then the rest of us. Still, living a reckless life without concerns about the law will not keep you from going to prison, or worse. A good sports coach will tell any star athlete upfront that chances are high they will have to be human for far longer than they are going to stars.
It is quite frequent that movies and television shows glamorize scoundrels. The reality in life is that fictional scoundrels would be scoundrels in real life. What good would it do you if you are incredibly wealthy and such a pariah that no one will associate with you? Remember, you don’t get to take any of your wealth with you.