Winning the lottery has become the new version of the American Dream. While the odds of winning are astronomical, it’s easy to see what is drawing so many people each week to buy lottery tickets. The Powerball lottery drawing for Wednesday, October 17, was last seen at $345 million, with a cash value of $199 million. The Mega Millions drawing for Tuesday, October 16, was last seen at $654 million, and its cash option value was $312 million. That’s $999 million in annuity value or $511 million in cash up for grabs during the first half of this week.
Either one of these lottery drawings is enough to make many new filthy-rich people. The cash options are lower on the lump-sum cash basis, but it’s still empire-making money and multi-generational wealth.
That old boring version of the American Dream requires a lifetime of hard work, planning and advancing in careers without much distraction. Winning the lottery changes all that in an instant and without the need for any skills at all. There’s no hard work required, and no qualifications are needed other than going to buy a ticket.
Despite even a fraction of this sum landing the lotto winners in the one-percenters club, there is a dark side to winning the lottery. It turns out that many lottery winners somehow manage to go broke after becoming vastly wealthy. And even worse, some have gone broke in just a few years. 24/7 Wall St. does not want to see anyone go broke. That’s why we have created a self-help lesson of 12 things not to do if you win the lottery.
With odds of roughly one in 300 million, lottery players should consider that they have a better chance of being struck by lightning on a sunny day. Still, this new American Dream is just too alluring for millions of Americans to pass up.
Now for the hard part. It’s imperative to have a game-plan in place for if you ever become filthy rich out of the blue. And these lessons do not have to be for lottery winners only. The same things can be applied to those who unexpectedly inherit millions of dollars, those who win a big legal judgment, business owners who sell their companies for millions of dollars, and even stock-option millionaires. Keeping a lifetime of wealth requires planning, and it even requires some sacrifices.
One lesson should hold true no matter where or how you grew up: No one should ever have to get rich twice. Lottery winners have to act fast, and they need to avoid the endless temptations that can rob unwitting people of their new-found wealth.
Purchasing an endless number of belongings, cars and homes can erode your wealth in a hurry. And then having to keep paying for those things, followed by poor decisions, and falling under the influence of friends and family are just some of the pitfalls for those who become vastly wealthy. There are predators and other considerations that have to be avoided at all costs.
Imagine what happens if people you know find out that you just became filthy rich. You could become a mark and a target. It’s sad to say, but there have been some unlucky lottery winners who have even lost their lives after winning. Bragging about getting filthy rich could get you killed.
Most lottery winners will take a lump sum cash option to have instant and vast wealth rather than to get paid out over a lifetime. It’s actually easy to understand why. It’s an instant empire-making sum without any wait at all.
Spending endlessly is a sure way to go broke. It’s not just the yachts and the jets and the homes. What can nail anyone is the upkeep costs, the cost of the people needed to maintain them, the insurance and the occasional calamity.
All this glitz and glam will require immediate financial planning, budgeting, learning about taxes and investments, and a slew of other actions for anyone who comes into it to keep their newfound wealth. If this seems ludicrous, go ask the dozens and dozens of well-known movie stars and musicians who have risen from nothing into the stratosphere but slid back down to being broke. Do not let this happen to you!
It’s hard enough to get rich as is. And imagine the ridicule you would have to endure from your friends and family if you went from being filthy rich in an instant to being broke all over again. Again, no one should ever have to get rich twice.
Take this one lesson to heart: If it sounds silly that you need to set up a strict financial plan and if it sounds silly that you need to put up safeguards to protect your new empire-money, then you are already at severe risk of going broke if you ever become filthy rich.
Here are the 12 things not to do if you win the lottery.