Winning the lottery can be a life-changing moment for anyone out there. However, if the money is not spent wisely, the lottery can also be a source of misery. So, how should lucky winners spend their fortunes? Well, that is what this article is all about. Find out some of the crucial tips on spending lottery winnings.
After hitting the jackpot, the first thing to do is decide whether to go for a lump sum payment or annuity. So, what's the difference between the two payment options?
A lumpsum payment allows lottery winners to collect all the remaining money at once, after paying taxes where applicable. The advantage of lumpsum payments is that they give winners full control of their winnings, allowing for flexibility in spending or investments. However, with a lumpsum, winners take home lesser amounts.
On the other hand, annuity payments are made in installments. The advantage of annuity payments is that winners take home slightly more than they actually won. However, there's the risk of the entity making the payment running out of funds.
After deciding on whether to go for a lump sum or annuity payment, the next thing is to try as much as possible to keep calm and take time to reflect on what to do next. Many times, lucky lottery winners start rushing on matters investment and spending without properly planning what they wish to do.
Take time, and let the reality sink in. It's also essential to avoid the media frenzy and unsolicited advice from friends and family. Many lottery winners have ruined their fortunes by listening to everyone's advice. The good thing is that lottos give winners plenty of time, up to months, to claim their prize.
The next thing to do is to hire legal and financial consultants. While this will incur costs, it's worth having professionals at hand to advise on critical aspects.
Hiring a legal consultant will help in taxation matters and any other related legal aspects. On the other hand, financial consultants help make critical financial decisions, especially regarding investments.
For those willing to go the extra mile, enrolling in a financial management course can come in handy. Such courses give learners key insights on financial planning.
After claiming the money and maybe going for a vacation with family and friends, the next step will be making investment plans. Some will recommend getting into real estate, while others will have different investment ideas. Of course, all this advice must be assessed critically as not all investments are worth it.
Everyone wants to grow their money wisely. Regardless of what a lotto winner wants to invest in, it should be a low-risk investment. Many lucky winners have lost their fortunes by putting money in high-risk investments.
While growing the money won is a priority, investing everything is not a nice idea. It's essential to save for retirement, just as everyone saves for their later years. At times, investments may go wrong, leaving winners with nothing to spend during their retirement years.
Here again, a competent financial advisor will be vital in helping winners calculate how much they should save for a rainy day.
That's it, folks, crucial tips for lucky lottery winners. Besides the above tips, lotto winners need to be mindful of their expenditure. They should avoid living large and dishing out handouts now and then. There are many cases of big money lottery winners who went broke in no time for living exuberant lives and giving friends and family handouts.