Worst Things to Do With Your Lottery Winnings

bad money decisions

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.

There are even a few lottery winners who have experienced multiple lottery wins by participating in a lottery pool and still lost it all (if you plan to start a lottery pool read this).

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.

insane lottery winner
This is a FAKE story but it is funny and highlights the points I’m making.

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:

10 million dollar loserSurprisingly, 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.throwing money away

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.

How to Best Invest Your Lottery Winnings

invest your lottery winnings

Most of the lottery winners are not able to manage their winnings. Even individuals having had multiple wins in their name have gone bankrupt in the past. Whether you are thinking of playing the lottery as an individual or whether you’re thinking of joining a pool, it is important to know how to invest your money if you win big.

There are a few spending mistakes you need to avoid once you rake in the cash.

1. Get in touch with your financial adviser:

financial adviserThe 1st and foremost thing which you should do is to get in touch with your financial adviser. By taking the aforementioned step you will ensure that even before you spend a penny from it, you are able to plan your investments.

You will also be able to understand how much corpus you can spend and how much should be invest.

You need to always choose a trusted financial adviser who has a long-standing history of giving the right advice. You have to get a financial ad adviser as soon as possible.

2. Diversifying your winnings:

With the help of a financial adviser, you have to make sure that you’re diversifying all your winnings. Diversifying will help you in securing your future.

Even if some of the investments do not turn out as planned, you will have plenty of money left to gain a passive income.

3. Do not invest in businesses you don’t understand:

confusedOnce you win the lottery, your relatives will be coming to you for various business proposals and investments.

Unless and until you have prior experience in the field, you should keep away from these investment proposals.

In most of the cases, you will end up losing significantly by investing in these business proposals. It is better to always stay away from these business proposals.

4. Value your family relationships:

You need to keep in mind that there is a constant strain on your family relationships once you win a lot of money. As a result, you have to communicate with your partner time and again after winning the lottery.

You have to communicate with them and explain to them each and every decision which you undertake.

Once you understand the value of family relationships you will ensure that you are able to keep your family together at all points of time.

5. Create a long-term plan:

Instant gratification is the reason why most of the lottery winners end up broke. You have to create a proper long-term plan.

long-term planningWith the help of this long-term plan, you will be able to generate passive income. You can live on this passive income.

Also, unless and until not necessary, you should not quit your present job.

If you really want to retain your lottery winnings, these are the 5 tips which you should always follow.

As long as you are conservative in your approach when it comes to finances, you will be able to retain the money quite easily. In most of the cases, if you follow these 5 guidelines, you will be able to grow your money.

With the help of these tips, you will lead a prosperous life rather than going broke by spending up all your lottery winnings.