Millions in every conceivable currency get distributed after every lottery draw all over the globe and while it’s a dream come true for every single lottery player, not all jackpot winners know how to handle their finances. It’s for this reason that lottery players should definitely plan in advance for a lottery jackpot win.
While most lottery jackpot winners live the life of luxury for the rest of their lives, there are those who end up throwing their money away. Some even end up in more debt than they started out with. What’s even worse is the fact that during their careless spending sprees, they lose their loyal friends and family members.
Therefore, we would once again like to mention this as we are always willing to spend some time with our winners to explain how they can preserve their earnings for a longer period of time.
For online lottery players who have a rough idea about how they will spend their money is already reserved for your future plans.
It may also help to maintain relationships with friends and family, and lead a healthy lifestyle even after becoming a millionaire overnight.
Common things successful multi-million lottery winners do
Knowing exactly how your lottery winnings can benefit you, in the long run, can do wonders for you.
Do you trust yourself?
When choosing between the annuity or a lump sum, you need to decide whether you trust yourself to manage your affairs on that kind of time basis versus getting it all at once.
When choosing how to handle your lottery winnings, it’s key to reflect on your own ability to manage money. If you have spent unwisely in the past, you may want to consider taking your lottery winnings in the form of an annuity.
If you feel capable of managing it, and you want to do that, take the lump sum. However, in order to preserve your new-found wealth, one of the first things that intelligent lottery winners do is talk to a financial expert. A wealth manager knows all the tips and tricks, from how the market is trending at the moment to the most lucrative assets to buy at that time.
They will also provide you with all the relevant information on how you can diversify your earnings so that you don’t end up putting all your money in one basket.
Taking the Lump-sum Pay-out
- You will receive your winnings quicker.
- Your winnings could be worth a lot more than the initial pay-out if prudently invested.
- Winnings are taxed at current tax rates, which could be higher in the future.
- Older people are guaranteed to get their entire winnings via the lump sum.
- No risk of unknown future variables affecting your pay-out. You’re guaranteed to at least receive the lump sum.
- Poor financial management of a lump sum payment, such as an overly aggressive investment portfolio or careless and outlandish spending, could leave you penniless.
- You will end up getting significantly less than the annuity payout. For example, a $10 million jackpot lottery ends up being around $5 million. Add in the fact that you will still have to pay tax.
- You give up a guaranteed income stream.
Taking the Annuity Payout
When you take the long-term payout, you receive the full amount of the jackpot over a period of 20 to 30 years. Here are some of the most important advantages and disadvantages to taking it:
- Annual payments provide long-term cash flow.
- An annual payment will likely land you in a lower marginal income tax bracket than the lump sum, so you may pay less in taxes over the pay-out term.
- You can’t “blow through” your entire winnings at once.
- You can better budget and maintain a certain standard of living with a guaranteed annual payment.
- You lose the opportunity to invest the lump sum and take advantage of compound interest.
- The annual pay-out is not adjusted for inflation, which means it becomes slightly less valuable every year.
- If you die before payments conclude, the remainder of your winnings may or may not pass to your heirs. This depends on the lottery and the state you won in.
Don’t let your loved ones turn you into an ATM
As you are already spending your well-earned money on lottery tickets and most of those around you are not, it’s safe to say that who you decided to spend the jackpot on is up to you – and you alone.
From the minute you realised that all the winning lottery numbers are staring back at you and you have just become a multi-millionaire, excitement might cloud your vision.
It’s perfectly natural to want to tell everyone around you that you have won the lottery but what you need to remember is, not everyone will be happy about it.
Unfortunately in life, there are those that will be jealous and while they might smile in front of you, they will be conniving behind your back as to how they can get the most out of you.
Which is why you should take the time now – before you win the lottery jackpot – and make a list of people who you know, without a shadow of a doubt, deserve to be helped financially.
If you do decide to share your winnings with family or friends, it’s important to understand the potential tax limits you could face. For example, in the U.S., you can give $11.4 million away, free from the Gift Tax. Each country will have its own set of tax rules with regards to this.
A new venture
Winning a lottery jackpot is once in a lifetime opportunity and many lottery players dream of starting their own businesses.
What they need to consider, however, is that the fact that all businesses take time to succeed and by that we mean to bring in enough money to cover all the initial outlay and only then make a profit.
Anything close to a million euros is more than enough to pay for your rent for the first few months. Not only that, you can cover other fixed costs like staff salaries and utility bills.
Escape the 9-to-5 for good and make sure you buy a US Powerball ticket today!
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