Michael Pilgrim is the Customer Relations Director of Overseas Subscribers Agents, as well as Editor in Chief of the OSA Newsletter.
By Michael Pilgrim
Published on November 26, 2009
It is a sad but true story -
many of the people who win the lottery, go from rags to riches, back to
rags, because they have no idea how to handle such a large sum of money.
And who can blame them, really?
Find a way to turn your winnings into hard cash as quickly as possible. Get a wheelbarrow and wheel the money into your bedroom. Lift the mattress and pour the money under. It will be very heavy so you will need the help of someone you can trust. Once you have completed this first mission, wait. Okay, taking time is definitely important but the rest is highly unadvisable.
It is a sad but true story - many of the people who win the lottery, go from rags to riches, back to rags, because they have no idea how to handle such a large sum of money. And who can blame them, really? Winning the lottery is literally like a dream come true. People think with money, all their problems just disappear, but what they don’t realize is that without proper management and financial control, things can get out of hand all too quickly. They’ll quit their jobs; buy a new house; buy family members houses; get new cars; go on extravagant vacations… Estranged family members, financial advisers and charities will come after them with their hands out - and all of a sudden the financial freedom they thought they’d finally attained, turns into an insurmountable and disastrous realm of chaos.
Makes winning the lottery sound pretty scary, doesn’t it? Well, wealth is scary. That is, if you don’t understand how to cope with it wisely. If you or someone you know has recently won the lottery, here are some tips you should consider in order to get the most out of your money and ensure that when you become rich, you stay rich.
1. Change your phone number Everyone you know and don’t know will be calling you so make sure you get a new unlisted number.
2. Get Advice before Taking the Lump Sum If you are given the option to take the lump sum of money or the annual annuity payment, be aware that the lump sum will amount to less money after all the applicable taxes are removed. The lump sum is ideal if you have a particular investment in mind. If so, you should definitely speak with a financial adviser to see if this investment has a real potential for growth and revenue in the long term. In most cases though, the annual annuity payment is the most beneficial as it helps you control your spending, while still enabling you to live a more than comfortable lifestyle.
3. Get the Taxes Out of the Way Get an accountant so you can settle any tax issues ahead of time and avoid fines in the future.
4. Pay Your Debts If you have debts, make paying them off your first priority.
5. Be Patient Be patient and sensible with your winnings. Financial experts recommend that upon winning, you should immediately put your money into an interest-bearing bank account, so you can consult with professionals on how to maximize the interest income.
6. Don’t Quit Your Job Or at least, don’t quit your job right away. Think about you and your family’s security in the long term- retirement funds, trust funds, college funds, not to mention a sense of purpose. If you really don’t like your job, consider taking a leave of absence so you can allow yourself some time to really think about what you could do with your new-found wealth. Is there a passion of yours you can finally realize?
7. Don’t Gamble Your Money Away Don’t gamble. Just because you got lucky once, doesn’t mean it’s going to happen again. The incredible two time lottery winner Evelyn Adams, made the foolish mistake of gambling away almost all her money at the Atlantic City Casino and now lives in trailer park.
8. Prepare Yourself for Change Be prepared for change. Winning the lottery is going to bring about big changes in dynamics with family, friends and career that you won’t see coming. It might be a good idea to seek some professional advice on how to cope with becoming rich and not letting it take over your life.