This weeks Mega Millions lottery is over $540 million! It is the largest lottery in history. If you win the jackpot you probably won’t have to worry about money ever again, right? Wrong! There are a number of things you need to do once you win the lottery. Here is what you should think about.
1. Decide on your payout. The lump sum payout is over $380 million. Just typing that number makes me giddy. Most winners take the lump sum payout and spend it as they like. That’s just what they do, spend it until it’s gone. It’s a common tragedy that most lottery winners do a poor job managing this large windfall. You may want to consider the annuity if you think you will have a problem with spending, and the annuity will give you more money over time.
2. Debt and Taxes. As soon as you take your pic with the lottery folks and that oversized check, make sure you set aside enough money for paying off all your debt. No point in having debts when you have all that money. You also need to set aside money for paying the tax bill that will be due. Don’t fudge here.
3. Avoid Spending Sprees. It’s ok to go and spend some money initially on things you and your family want and need. Just don’t make it a constant habit. Set a budget, yes I said the “B word”. Even with as much cash as Trump, you should budget to make sure you don’t overspend.
4. Invest for the Long-Term. In my previous post, Investment Boot Camp, I discuss my four principles for long-term investing. It’s absolutely critical that you maintain a balance in your investments. Continue to take the long-term approach, watch investment expenses and diversify. Tax-free investments will more than likely become your best friend.
5. Generosity to Family and Friends. It’s natural to want to help family and friends when you win a pile of cash in the lottery. You may want to donate to some charities and organizations that you feel strongly about, or even set up your own foundation. Just be careful how much you fork out, because relatives you didn’t even know you had will start to appear. When you become known as a soft touch for giving, everyone will try to take advantage of you.
6. Call me. Seriously, if you win the lottery, call me! I want to manage your Mega Millions. You will need good financial and tax advice. Getting the right team together with a wealth advisor playing quarterback will be one of the best decisions you make. A wealth advisor can help you put together a financial plan that will allow you to develop a strategy for protecting your new-found hoard.
So when the numbers called match your ticket, think about these six steps. If you need help investing and planning after your lottery jackpot, write me, no CALL ME at (859) 225-2596. Don’t forget to sign the ticket first.