5 Smart Moves for Lottery Winners, Inheritances, & Maybe Even You
September 14, 2012
This is a guest post from Jason Price, husband, dad, soccer fan, and blogger on the journey to financial freedom at OneMoneyDesign.com.
Sure I’ve had thoughts about winning the lottery. I think most of us have at one time or another. Personally, I don’t play it, but I’ve purchased a few tickets here and there in the past for fun. I think playing must be done so with budgeted entertainment money because the chances of winning are just too ridiculously small. It would be foolish to waste large sums of money on playing.
That being said, let’s dream a little… can you imagine waking up the next day to find out you’re a multi-million dollar lottery winner? Ha, wouldn’t that be something! Life would be changed in a matter of hours. Would you go to work the next day? Buy your favorite car? Give money to someone or a great cause? It all seems like wonderful possibilities.
But would this new found fortune be a good thing?
I’ve watched TV documentaries in which lottery winner’s ruined their lives after winning all that money. Some lost their friends, spent all their earnings, became addicted to drugs, and let money completely became the owner of their lives. These were frightening, but real stories of what large sums of money can do to people if mismanaged.
But does winning the lottery, or even receiving a large inheritance, have to be such a misfortune? I believe it doesn’t if you manage it well. In fact, if you can manage your monthly income well, and have your priorities in order, you’ll likely do very well if you were to receive a large, life – changing sum of cash.
Let’s dream some more…you just received a multi -million dollar fortune, whether it be lottery or other. People are knocking on the door to shake your hand. They want to meet you, rub elbows with you and congratulate you. Some will be friends, long lost relatives and many, many people who will claim they can help you manage the fortune.
So, you ask for some help and I come up with 6 simple moves that will insure you don’t let your emotions or the money control your life. Let’s take a look.
1. Give – the first order of business is to give at least 10% + away to a charity you’re passionate about, or to your church as a tithe. At this point, I would caution about giving to individuals. I know many people have needs, but unless it is a life or death situation, I would not give anyone money. Giving is a matter of the heart and it will insure this new money doesn’t have a hold on you.
2. Become debt free – The second thing I would do is to go ahead and pay off all those debts. Yep, pay off every credit card, school loan, car loan or other. If you’ve filed bankruptcy in the past, you should pay debts back that you were released from without further obligation. It sounds crazy, but you will appreciate being emotionally released from that debt too.
3. Save – The third thing I would do is open a savings account and deposit the rest of the money. Yes, nothing should be going in a primary checking account. NOTHING. At this point, it’s important to try and forget you won the money. It will be difficult at first, but give it time to let emotions settle. Stop taking phone calls and talking to people about it. Do everything possible to keep life moving forward as it was before winning the money.
4. Work – I would definitely continue to work at the same job for 6 months. No buying new cars, toys, NOTHING. Continue to work at the same job and be still. Be silent for 6 months and let that money sit in the account.
5. Plan – Across these next 6 months I would reconsider my life goals and create a plan. Identify those passions in life. It should be very clear (and list on paper) what your life goals are before ending that 6 months. If not, take more time to plan.
Within the 6 months it’s also time to find trusted experts to plan for things such as taxes, paying off a mortgage, if that’s a goal, investing for retirement or in a business and much more.
In summary, the idea is to continue to stay active, work and have a plan for the money. Without a plan, we would all be at the whims of the power of the fortune and it would surely wreck our lives.
Let’s turn back to reality now… The interesting thing about these moves is they could be applied to any situation, whether someone inherits millions, wins the lottery or makes $30,000 per year. Give, get out of debt, save, work hard and have a plan for your life and money.
So, what do you think of this plan? Could you use it if you were to come across a large sum of money one day?
All posts by Ben Edwards
These are great tips. I think giving always leads to getting something in return. Not that that is the reason to do it. But, giving is insurance that you give to someone else and to help them.
Great list! It seems silly, but I’ve always dreamed of building a large, aesthetically pleasing building, right in the heart of downtown, and making it a soup kitchen. I have such a passion for the homeless and disadvantaged. No prerequisites. Nothing. If you’re hungry, or you need a cot for the night, come on by.
I suppose it would help my chances of winning the lottery if I actually bought a ticket, but for now, I’m paying off my debt!
That sounds like a great plan! When you get a really large amount of money, the first thing to consider is paying off all your debts. It is also good to donate a portion of your money to charitable institutions to help out those who are in need. I would also suggest hiring a financial planner to help you out on how to handle your finances. Of course I’m biased on the financial planner part 🙂
Great list! Luckily, #2 doesn’t apply for me and my husband. And depending on the winnings it might be hard for me to do #4. But #5 really got me thinking. It would be so easy to make a few impulse purchases in that scenario, and I think forcing yourself to wait for a pre-determined period of time will ensure that the money is utilized in the way that is most important to you.
I’m always surprised when I see people who become wealthy by the way of inheritances, etc, that don’t give any of their money to charity – or, very little. I was watching a show once and the person on the show was being profiled after having won the lottery. They were talking about how they didn’t know what to buy anymore, because they had all that they needed. So why not give to charity?
I think it’s a good idea to let money sit for a period of time after acquiring a large sum, but unfortunately so many get greedy.