Winning the lottery is a dream of many Americans. It can change your life in some positive ways and others negatively.
Some solo winners are unprepared for sudden wealth and squander their winnings or buckle under the stress of mooching friends.
You will need to work with an attorney to set up trusts and other legal structures. You will also want to discuss how to handle your winnings: a lump sum or annuity payments?
It Can Change Your Life
Many people dream about winning the lottery or investing in a hot IPO. But what does it actually mean to hit the jackpot? A jackpot is a large win in an online game, a casino, or a slot machine. But it also refers to a significant victory in any field. Actress Piper Perabo once told Bolde magazine that she felt like a winner when she landed her role on Coyote Ugly. And the term can also be used to describe a successful marriage, a great job, or a big score on a stock market investment.
Some lottery winners end up in a downward spiral after their windfall. They may spend too much, run out of money, or become a target for criminals. Pagliarini says that anyone who wins a large sum should immediately hire a team of professionals, including an attorney, accountant, and financial planner. They should also consider whether to take a lump sum or structured payments over 30 years.
It Can Change Your Relationships
Winning a jackpot is likely to change your relationship with other people. A laundry list of horror stories follows lottery winners who manage their winnings poorly and lose it all, sometimes landing in strained relationships, bankruptcy or even prison.
The simplest way to avoid getting lost is to draft a budget. Budgets are not just for poor people, and many wealthy individuals prepare them to ensure they spend less than they take in. A budget also helps people pay off debts, such as lingering credit card balances.
Another way to stay on track is to hire a team of professionals, including an attorney, accountant and financial planner. Depending on state laws, lottery winners can opt for a lump sum or annuity, which has its pros and cons. The decision should be based on the winner’s goals, age and whether they think they might squander a lump sum, said Mike Finnegan, tax managing director in the Phoenix office of accounting/insurance firm CBIZ MHM.
It Can Change Your Career
With the Mega Millions jackpot at $560 million ($287 million cash option) and the Powerball at $875 million ($452 million cash option), many Americans are dreaming about winning a large sum of money. However, winning a lottery does not solve all your problems and it can actually change your life for the worse.
You should start by finding a team of trusted professionals who can help you navigate your newfound wealth. This includes attorneys, tax professionals and financial planners. It also helps to find a therapist who can help you deal with the stress and anxiety that comes with winning a big jackpot.
You will need to decide whether you want to receive the entire prize in one lump sum or 30 annual payments. Each has its pros and cons, so it’s important to consult with your financial advisors to determine which is right for you. You will also need to think about how this windfall will impact your investments and your overall portfolio.
It Can Change Your Health
Whether you win the lottery, back a winning horse, or get in on the ground floor of a hot new IPO, it’s human nature to daydream about such good fortune. But winning a jackpot – or any major windfall – can cause serious problems.
The first thing that happens when you win a lot of money is that you have to pay off debt. Next, you have to hire a team of advisors and planners to help you manage your finances, including a tax professional to avoid big surprises down the road.
But even if you have a team in place, winning a jackpot can still be difficult because it puts you in the spotlight. Many people who win the lottery say they are plagued by media requests, begging friends and family for handouts, and being asked to appear on reality TV shows. If you want to avoid this, you can hide your identity by changing your phone number and only sharing it with trusted friends and family members.