If there is one event that can enthrall the entire nation at once, it is winning a major lottery drawing. After all, winning the lottery is the new version of the American Dream. It means that no one has to endure a life of hard work, saving and planning to become very wealthy. This year has started with a rather unusual circumstance in lottery history, with two major lottery drawings up for grabs with obscene amounts of money. The Powerball lottery jackpot has risen to a massive $550 million and the Mega Millions lottery jackpot has risen to $418 million.
One thing driving the interest in the lottery is not just that it is vast wealth — it is instant wealth! You have to have zero qualifications to win, other than paying for a ticket, and this vast wealth will have required no planning, no saving, no responsibility and not even an advanced degree. And, as a reminder of how tough the world can be, you have the media and politicians telling the public almost every day that it’s just too hard to get rich the old-fashioned way with hard work and years of planning.
The odds of winning are quite low. Still, winning either the Powerball or the Mega Millions lottery would easily make for the best new year gift anyone could imagine. Add these up and there is a whopping $968 million up for grabs. The long and short of the matter is that it doesn’t matter which lottery gets won, and it doesn’t matter which payout option the winners choose. This money is so vast that it will instantly create multi-generational empire-building wealth.
The Powerball’s annuity value of $550 million for Saturday’s drawing has a lump sum cash payment option of $347.9 million. The Mega Millions jackpot of $418 million is the annuity value for Friday’s drawing, but the cash lump sum payout is $261 million.
While getting this vast wealth comes with endless opportunities and endless imagination, there is a dark side to winning the lottery. Many lottery winners somehow manage to go broke. Some of them even go broke in just a few years. It is for this reason that 24/7 Wall St. has created a self-help guide for lottery winners: 12 Things Not Do If You Ever Win the Lottery.
It probably seems impossible to blow through $100 million, $200 million, $300 million or even $500 million. In today’s world it is quite easy to blow through that vast fortune. Lottery winners who do not make immediate plans and do not put safeguards in place are on the path of going broke. It’s already hard to get rich once, so take it to heart that no one should ever have to get rich twice.
These tools for what not to do can easily be applied to anyone who comes into fast and unexpected wealth. That could be wealth from a business sale, an unexpected inheritance, a legal judgment, selling a family asset or becoming a stock-options millionaire.
There are almost an unlimited number of things that lottery winners can buy, and there are endless numbers of events that can drain your money rapidly. There are also many bad people out there who will prey on lottery winners or anyone who comes into instant wealth.
Lottery winners need to know going in that some of those pitfalls may come directly from their friends and family. Others may come from acquaintances, and some may come from those who intend to do harm. It is important to understand that some people who fall into instant wealth even lose their lives. Does it seem right that bragging about getting filthy rich could even get you killed? That’s no joking matter.
Most lottery winners choose to take the lump sum cash option to have instant and vast wealth. After all, it’s all now and all at once rather than having to wait for paydays again.
Family relationships and friendships will be tested, immediately or over time, after winning the lottery. Getting a financial plan, setting up a budget and understanding taxes and finances will be imperative. Again, it’s just too easy to blow through a vast fortune.
Add up the costs of buying mega-mansions and yachts, and throw in private jets and luxury cars. And why not have lavish vacations, fine art and the best jewelry money can buy? What about owning a private island, taking everyone you know on a luxury cruise, having the top music performers conduct a private concert? These and the endless number of other temptations can literally bleed you dry. Paying for these things is one thing, but think about the ongoing costs of insurance, personnel costs, security and taxes that have to be paid over time too.