Congratulations! You’ve just won the lottery.
Or, at least, those are the words you’re expecting to hear at any minute. Sure, your chances of winning may actually be one in a gajilion, since the lotto is the most popular and widely practiced form of gambling in the United States — but, as they say, you never know.
You probably have lots of lofty ideas about how you’d spend your huge payout lottery winnings. After a soak in a champagne-filled hot tub and an overindulgence in caviar donuts, perhaps you even have some practical plans. Maybe you’ll buy a new house, maybe you’ll be making an investment, maybe you’ll find ways to reduce debt and pay off that $3,761 that the average person owes in revolving credit loans.
But in reality, people often don’t know how to handle all of that money once they actually receive lottery winnings. Take a quick search through Google to read all of the horror stories about past lotto winners who lost everything to overspending, drugs, gambling, lawsuits, or any other kind of foolish spending.
Don’t be that person in the news. Have a real plan for when you hit the jackpot — just don’t expect it to be as glamorous as you might think.
Step 1: Hire a lawyer. Yes, this is the step you should take before you even claim your winning ticket. The moment you put yourself forward as a winner, you forego your privacy rights. Media outlets will want to interview you. Programs will want you to support them. Supposed long-lost relatives will want to “catch up” with you. Get a professional on your side before you set out into this new world.
Step 2: Lay low. This is harder than it seems. Again, everyone will be clamoring for your attention (and deep pockets). While your lawyer gets your financial ducks in a row, maybe take that trip to Siberia — or some other place where no one will bother you — you’ve always dreamed of.
Step 3: Decide how to get your money. Most of the payout lottery winnings are delivered in annual increments, or annuities. The most common are over 25 years or until death. If you’d rather have your money up front, you can sell that annuity for a lump sum payment and get cash instead through a financial institution. If you want the best of both worlds, you can sell a portion of the annuity payments for an immediate lump sum.
No matter what you plan to actually do with your payout lottery winnings, play it smart. Have a plan and stick to it so that, when you strike it rich, you’ll be able to do everything you want.