Congratulations. You’ve just won the lottery (or a Sports Bet). After the dopamine rush and mad thrill of it wears off, I bet you’re wondering: now what? Most people who come into a lot of money either have the benefit of a slow build up, allowing them to learn as they go or, in the case of an inheritance, advice from family. Lottery winners have neither and, consequently, they need a financial adviser for lottery/Sports Betting winners.
1. Remain anonymous. Once people know you’re suddenly wealthy, you’ll be badgered by requests for handouts from everyone from charities to long-lost friends and relatives–not to mention all the financial “experts” who will be vying for your business. So check state rules to see whether you can dodge them all by remaining anonymous.
Make sure to request that the company in charge of your winnings stay mum about your name.
2. Avoid sudden lifestyle changes. For the first six months after you win the lottery, don’t do anything drastic, like quitting your job, or buying a house in Banana Island, trading up for a luxury car or partying your winnings away. Meanwhile, set aside a fixed amount for splurges—it’s only natural to want to celebrate your windfall.
Save the big purchases for later. For example, you could rent a house in the neighborhood where you were thinking of moving, before you make any commitments, says . If you need a new car, buy a budget model for now.
3. Pay off all your debts. There is no better investment than paying off debts. Whatever the type of Debt, it is wise to pay it off. Enough said.
4. Assemble a team of legal and financial advisers. In situations like this it’s very hard to know “who’s trying to help you and who’s trying to use you,”. Rather than signing on to a group of advisers that someone else has put together, I recommend handpicking your own lawyer, accountant and investment adviser, and requiring them to work together.
5. Invest prudently. We recommend putting the money in safe, short-term investments and not even touching it for the first six months. Then ask your advisers is to put together an investment portfolio divided half-and-half between equities (such as stocks) and fixed income (like bonds). Don’t fall for investments that you don’t understand or that sound too good to be true.
6. Live within a budget. Especially if you’re not accustomed to having a lot of money, it may take some discipline to preserve your winnings and not go on a wild spending spree. One way to restrain yourself is to only spend income–not principal. Especially in today’s investment world, It takes a lot of principal to generate income and once you start spending principal, the principal quickly dissipates.
7. Plan charitable gifts. You can offset the additional income from your lottery winnings with a charitable deduction. .
If you are unable to decide between now and year-end which charities to support, it may be worth considering a donor-advised fund.
