After winning the lottery, it’s essential that you form a financial team to manage your newfound wealth responsibly. While it can be exciting and overwhelming at the same time, don’t get carried away with ideas of all the things you could do with all your riches – instead focus on taking steps now so your new fortune doesn’t disappear overnight.
Financial advisors can assist in making sound decisions, such as choosing between lump sum or annuity payouts, legal and financial planning services, etc.
Find a Financial Advisor
Financial advisors with experience managing finances of high-net worth individuals can assist lottery winners in managing their unexpected wealth. They can advise them on the most suitable ways to claim and invest their winnings; additionally they may recommend taking an annuity payout instead.
They can assist lottery winners in creating budgets and spending goals, helping to decide if it would be more prudent to cash out their entire win or invest it over time using dollar cost averaging strategies. Furthermore, lottery experts provide advice about structuring businesses and personal assets to minimize taxes.
Lottery winners looking for financial advisors should prioritize finding one who is capable, affordable and transparent – while making sure their advisor is fiduciary–meaning their client’s interests come first legally. Friends or family can recommend an ideal advisor or they can conduct research online until they find one they trust.
Pay Off Debts
Debt may be unavoidable at times, but winners must strive to eliminate debt as soon as possible and establish a debt-free future. They should create a budget based on their new wealth and set spending and savings goals for themselves in the future.
Once they are debt-free, they can begin saving and investing their income.
As new jackpot winners begin managing their winnings, it’s vital that they find a team of professionals to assist them with managing them. This might include financial advisors, tax specialists and even philanthropic advisors. Irwin recommends seeking out teams with experience managing ultra-high net-worth individuals; these professionals will assist them with creating an individualized plan and understanding how taxes will apply; they may also help prevent making irresponsible spending decisions which they might later regret once the initial excitement has faded away.
Establish a Debt-Free Future
As you seek to become debt-free, a financial advisor can assist in developing a budget that allows for the gradual repayment of existing debts while allocating funds for future expenses like homeownership, education or retirement. Consistency and discipline are keys to successful debt repayment.
Financial advisors can also offer guidance or ideas for investing your winnings to maximize its potential and provide long-term security for you and your family. However, this step requires taking a step back from the excitement of winning and considering all aspects of how best to use the winnings.
Before you claim your prize, it is crucial that you assemble an expert team consisting of lawyers, accountants and financial advisors with experience handling large financial windfalls. These professionals can assist in making important decisions like accepting either lump sum payment or an annuity option and helping form specific plans based on personal goals.
Invest Your Winnings
Lottery winners face another crucial decision after receiving their winnings: whether to opt for a lump sum payout or an annuity spread out over 30 years. Each option carries different tax implications and lifestyle considerations.
However, lottery winners who act without professional advice often make hasty decisions that endanger their newly found wealth. Such irreversible changes could include quitting their job, buying a new car or investing in their uncle’s classic car restoration business instead of making mainstream investments that could help their winnings grow over time.
Responsible wealth management requires taking an approach that balances short and long-term goals. Prioritizing debt payoff and working with a financial advisor are effective tools for lottery winners to avoid making costly errors that compromise long-term potential for success. Now is an opportune moment for lottery winners to pause and consider the most responsible way of overseeing their winnings. With Powerball and Mega Millions jackpots reaching record heights, lotteries winners should take time to reflect upon how to best use their winnings responsibly.
