You wake up. You’re tired. The alarm clock won’t stop ringing. Yet another day of toil begins. Or so it seems. Yes, that’s right. You bought a Powerball ticket last night. Pop-out that phone, you tell yourself. You check to see if your ticket won. The app begins to scan that thing while pessimistic thoughts run rampant through your mind. No freaking way! It says: JACKPOT WINNER!!! In an instant, the whole world stops. You take a moment to conceptualize what you’re seeing. Wait, how much? THE JACKPOT!!! Can you believe it? There’s no way you’d ever have to worry about being broke again.
Whelp, pump the brakes on that thought.
Many news media sources have reported an inaccurate stat that alleged, according to recent National Endowment for Financial Education (N.E.F.E.) studies, 70 percent of lottery winners go broke. The number is lower and is constantly changing. Nevertheless, it isn’t uncommon to see big winners go broke, so studies are ongoing to determine the true scope of the problem.
The stories about why lottery winners go broke vary from case to case. One lottery winner trusted the wrong person to attend to their affairs. Several times, jackpot winners didn’t know how to manage their money and blew it all on things the righteous person might call “unsavory.” Of course, some jackpot winners have tried their luck at becoming the next drug kingpin.
Things can go wrong in many ways, so how do you avoid becoming another statistic?
A lawyer we spoke with said to formulate a systematic plan immediately. Life after winning Powerball is more challenging than it seems. There are a lot of hoops that you’ll need to jump through. You’re going to get taxed big time. All sorts of terms are going to get thrown at you. And the lottery company will rush the process once it starts.
The best thing a recent lottery winner can do is create what the folks at State Farm call a “crack team.” For most, including you, the team will consist of a lawyer, accountant, and financial adviser.
When creating the team, you must research and make copies of your winning ticket to prove your legitimacy to these professionals. There are tons of charlatans out there who’ll take advantage of folks who’ve never been in these situations, but there’s also a bunch of good folks who’ll want proof that you’re who you say you are. After all, most experts need more time to deal with the big corporations worth billions.
It’s also imperative that you find professionals who have positive experience dealing with situations like yours. There’s a good amount of professionals who’ve helped many high earners successfully manage and build their newfound wealth. Yes, these professionals may cost more, but they’ll add more value for your buck.
Once you assemble a team, getting everyone together and committing to a brainstorming session is a brilliant next step. According to a financial advisor, most decisions you make on one thing will impact another.
- Will you take a one-time payout or do an annual distribution plan?
- What will the tax situation look like?
- Will you be investing a portion of your winnings?
- What bank will want to take on your winnings?
If you’re working with each expert individually, odds are you’ll be “tripping over each other’s feet.”
According to our expert, corporations prefer not to outsource work and keep all their experts in-house — to limit the bureaucracy.
The financial advisor said to figure out the answers to those questions. Make sure your experts keep you honest. If they’re good at what they do, they’ll keep you from doing anything too absurd. That includes making too many luxurious recreational purchases, avoiding bad investments like crypto coins, and staying out of trouble with The Internal Revenue Service.
There are a good amount of financial advisors who’ve worked with Powerball winners who thought their money was endless. These winners should have properly invested their money or moved a sizeable portion of their winnings to a savings account. Instead, they spent it all on “worthless things.” Sooner than they could anticipate, the money was gone.
One accountant we spoke to for this article said buying too many high-cost, luxurious items is why most millionaires go broke after winning the lottery. Most of those super-expensive items, like, let’s say, high-end sports cars or $10 million mansions, come with high maintenance costs. That’s all fine and dandy if there’s money constantly coming in.
It becomes a problem when the money stops. Even Powerball jackpot wells can run dry if the winner is not replenishing them.
Pundits like real estate agent and YouTube business investigator Spencer Cornelia have argued over the years that jackpot winners would fare much better if they invested some of their newfound wealth into ventures like real estate. It’s a success story only sometimes, but with the right advice, Powerball winners can watch their money make money for them. The financial advisor we spoke to said real estate is a good investment in most situations, but it’s usually on a case-by-case basis.
Many experts recommend learning about managing your finances. Get some certificates in real estate or whatever investment ventures you might be interested in. Continue adding to your rapport and aligning yourself with professionals who can get you closer to your financial goals. The big-time earners who consistently keep evolving their game are the ones who set themselves up grandly for the long run. Former National Football League All-Pro running back Marshawn Lynch has used this strategy to achieve long-term financial success during and after his playing career.
Several lawyers we spoke to suggest writing a will once all the dust has settled and your plan has been set into action by your team. This way, no matter what happens, you save your loved ones the hassle of taking the extra steps to claim your estate without having something in place. By making a will, you can do away with anyone trying to do you harm to get a shot at your leftover money. What’s the point of them harming you if they have no shot at getting your money? It sounds out there but crazier things have happened.
Nevertheless, preparedness separates the true winners from the losers regarding maintaining and growing wealth. If you have a solid plan, top-notch people to help you execute what you want, and a willingness to learn and grow, you should be on your way to long-term financial success. You’ll still be able to enjoy your money. See the world. Build the home of your dreams. Buy yourself the much sought-after authentic ’60s Gibson Les Paul Standard you’ve always wanted. However, you can do all these things with peace of mind. Not only will you enjoy long-term success, but you’ll also help build the foundation of your family’s generation wealth.
