Eight Things To Do After Winning the Lotto

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Winning the lotto is a life changing event, especially if you have been suffering financially prior to winning the Jackpot. I assume that, after getting the good news, you will probably have your resignation letter ready and a long shopping list of how you going to spend the money. Believe it or not, statistics show that 70% of lottery winners end up broke and a third go on to declare bankruptcy, according to the National Endowment for Financial Education.

Here are 8 things you can do to try and preserve your new-found wealth and not be part of the statistic.

1. STAY ANONYMOUS

I repeat: STAY ANONYMOUS.  In today’s social media-age you might be tempted to make an Instagram post about your winnings. You need to resist the urge to tell people about your new- found wealth and tell as few people as possible – if any at all!  You will save yourself a lot of trouble and avoid new family members suddenly coming out of the wood works.

2. ANNUITY OR LUMP SUM?

The first big decision is: are you going to pick up the annuity or the lump sum?

An annuity is a fixed sum of money paid to someone month, quarterly or yearly depending on the agreement.

Once your ticket has been verified by the national lottery, they will give you the two options: either you want an annuity or lump sum payment. For someone who is not financial savvy the annuity option is probably the best option as you will get monthly payments from the national lottery for next 20 years. The risk of choosing the lump sum is that you might end running through the money quickly and before you know it you back to square one.

3. RESIST THE URGE TO SPEND

Here’s where your self-control and discipline will REALLY be tested. If you win the lottery, don’t make any major purchases that you wouldn’t normally make for a while and do not resign from your job immediately.  You have to get used to having that money first. The best thing to do is sign the lotto ticket and wait for about 3 – 6 month before collecting your winnings so by the time you do collect your winnings it is no longer a shock and you have digested the idea of having a lot of money.

4. BECOME DEBT FREE

This is probably the only time to break rule 3.  if you have existing debt, the very first thing you do when the money reflects in your account is to pay of your debts

5. GET A TEAM

The 90’s popular rapper, the Notorious BIG, coined the phrase “more money more problems”,  and he wasn’t lying.  The more money you have the more problems you have.  You absolutely need to have a good team of professionals (eg. financial advisor, lawyer and psychologist) to help you with all the things associated with a lottery win.

It will be very hard to say no, when friends and family ask for money or that extend cousin who wants you to invest in their fly by night business. This team that you have will be the people that will say no on your behalf to the many bad business plans and money requests people will have around you. And remember rule 1: STAY ANONYMOUS.

6. BUDGETING

Generally speaking, making a budget and keeping to it is an essential practice to live by, no matter how much money someone has. When you suddenly win a whole bunch of money, it can be easy to think that the money will last forever. Even with millions of Rands it is very easy to blow through it.  You just have to watch the reality show “I blew it”.

You will need to set a monthly and yearly budgets to avoid the pit fall of spending lavishly.

7. LET YOUR MONEY WORK FOR YOU!

For this rule you will need to consult your financial advisor. They are the people who are qualified and registered with the financial service board. The financial advisor will assess and advice you on how and where to investment your money properly. Do not take financial advice from unqualified people or social media – that is one sure way of losing your money.

8. NO NEW FRIENDS!

If you have been watching the reality show “I blew it” you will notice a trend with many of the guests: when they get their monies they are suddenly surrounded by lots of new friends. However, believe me, more often than not, these people are after your money.

Winning the lotto can actually be used as an example, as these rules do apply to anyone who has gotten a lot of money, either from the road accident fund (RAF), or a huge inheritance left by a loved one. 



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