Winning the lottery may seem like one of the most wonderful things that can happen to you, but only if you handle it correctly. While an unexpected influx of money is always likely to be a good thing, it can also pose difficulties for those who are unprepared for such a windfall. Statistics say that most lotto winners go broke within 5 years of their winnings. Most of them destroy their families and friendships. To avoid the challenges posed by having to deal with newfound wealth overwhelm you, there are certain steps you can take to deal with your new situation.
1. Keep it to yourself
While it may be tempting to spread the word about your good fortune, letting people know about your winnings opens the door for unwanted attention from those only interested in taking advantage of you for your new financial status. By keeping the news to yourself, at least for a time, you insulate yourself from appeals of this nature. My advice to my lotto winning clients is not to tell people about your winnings, if they happen to already know, tell them that even though you won, the money will not be available to you for a whole year. You would be surprised at how many people will just move on knowing that they would have to linger for a whole year to get some of your money.
2. Keep your job
It doesn’t have to be forever, but keeping your job, if only for a while, can help you stay grounded even after you’ve come into a fortune through the lottery. At least initially, the routine of continuing to work can prove comforting as you mull over how your newfound wealth will change your life. Once you’ve had some time to think things over, you may decide to quit your job and plan retirement, but at least you’ll have had some time to consider your options.
3. Hire a financial advisor
To retain your wealth, it is important to surround yourself with an experienced team of financial experts. Your financial advisor can recommend investments to help preserve and grow your wealth, depending on your risk tolerance and investment objectives, tax situation, and more. Your advisor can also help with budgeting and devising an overall financial plan to make sure that your wealth serves your needs throughout your life. A good financial advisor will not just coach you on your finances but will also coach you on how to manage the expectations of your family and friends when it comes to your winnings. Another benefit of having an experienced financial advisor is that he would be able to call upon his resources for your benefit, introducing you to the right team of Accountants and lawyers who can help you stay protected using tax strategies and estate plans.
As a financial advisor I have extensive experience in helping high net worth investors draw up and implement financial plans – please feel free to contact my office if you would like to discuss how I can help you in the planning process.
4. Do Tax Planning
Uncle Sam will expect his share of your lottery winnings, so you need to make sure that you are taking this into account in your planning. In addition, with your income level likely to increase it is wise to pay more attention to tax issues going forward. Using smart tax strategies will save you a lot of money if you plan ahead!
5. Get an estate plan
If your winnings are sizable enough, you may not plan to spend the entirety of your winnings over your lifetime. If this is the case, an estate plan is necessary to make sure that your estate is distributed according to your wishes. A good estate planner can help you draw up a plan that allows you to provide for your heirs in a manner of your choice.
Coming into a large sum of money via the lottery or an inheritance can change a person’s life dramatically especially if you do not plan correctly. An experienced financial planner can help ensure that the change is a positive one.
If you have won the lotto or an unexpected inheritance feel free to contact me – I will be happy to give you free tips on how to protect yourself and your wealth for generations to come. Schedule Your Free Financial Planning Session with certified financial planner Los Angeles Samuel Rad.