The history is full of lottery winners making terrible financial mistakes. Most of the people playing the lottery do not ever imagine that they will win the lottery. As a result, when it finally happens, they are not sure how to react.
While everyone will give them the advice to invest your money but many winners look for instant gratification.
If you’re serious about playing the lottery, it is important to look into these mistakes as this can be a guide for spending mistakes to avoid.
1. Taking the money upfront directly:
In most of the cases, the lotto company will provide you with the option of the upfront amount as well as an annual payment for your entire lifetime.
Instead of taking the upfront payment, it is a much better idea to opt for the lifetime payment. As a result, you will be able to get regular cash flow for the rest of your life.
2. Not adding a financial advisor:
Most of the people think that they are capable of making their own investment decisions.
If indeed, you are investing left right and center without taking the advice of the financial advisers, you will end up losing a significant amount from your corpus.
The financial adviser will help you in parking the money in the right assets which can appreciate in the longer term rather than depreciating your net-worth.
3. Not caring about debt:
Surprisingly, most of the lottery winners think now that they have a lot of money, they can service the debt over a period of time.
Even more surprising is the fact that many of the lottery winners actually take up additional debt.
The thinking behind this is that now that they have a lot of money, they can easily use the leverage provided by the banks.
The problem is that when you’re taking more debts, you are actually significantly reducing the corpus which you have.
You have to avoid taking on new debt at all costs. On the other hand, you have to think about paying off all the debt which you currently have.
4. Do not imitate millionaires:
The worst financial mistake which most of the lottery winners make is that they start imitating the millionaires.
You need to understand that millionaires in most of the cases have a consistent stream of income.
On the other hand, lottery winners have just won once. If you go ahead and imitate the millionaires, you will end up losing at all.
Also, you have to ensure that you are not living beyond your means.
When you’re becoming a high roller, you will be surprised to find out how much money you can be blown up in such a short period of time.
Once you are able to abide by these few guidelines, it will become easier for you to retain your money.
All you need to do is to be conservative in your spending and you will be able to keep the money which you have won and not look for a job again.