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Illustration by Mariam Apd El-Nasir
So you’ve just hit the jackpot and your biggest dream has come true. You might want to scream or call your family and tell them (we object to this idea - more info about this soon) but it is probably an amazing feeling. However, once that initial excitement wears off you might find yourself in a position asking “what do I do now?”. It’s important to have some reasonable plans in place, as 70% of lottery winners end up broke due to reckless spending! This article covers some useful advice for you.
It’s crazy to think of how many people switch up for money. You might have people who aren’t even in your life reaching out, and there will be loads of stories coming your way from people who need financial help. This is not to say you can’t help them out, however you will want to structure your winnings in a way that gives you enough to cover everything you want to do with it without it running out. You might also want to avoid telling your close family, just until you’ve decided how much you’re planning on giving them.
There is also a surprisingly high rate of murders or kidnapping that happens to people who win the lottery. Therefore avoid posting about it on any social media! And accept your winnings anonymously if you can.
Set up your team to make sure your money is utilised in the best way for your future. Hiring professionals can help you make sure you aren’t spending every penny on things that only have short term benefits. The aim isn’t to be rich for now, it is to stay rich.
They will advise you on other things such as tax on your winnings. In the UK, you do not have to pay tax on lottery winnings but in the US you do. However there is tax on gifting it to friends and family in the UK that comes through in the form of inheritance tax.
It might be exciting to be able to start spending however you are in a position to pay off any loans that might be weighing on you. Practice smart personal finance so that you don’t have to worry about your debts after this - this includes credit cards, student loans, car finance, mortgages etc. You could still have a lot left after you do this!
Investing is a good way to protect your money from your own temptations to spend it. It ensures that you have wealth set aside for your future, and is better than placing it in a savings account. Your best bet is to invest in low risk investments and not set aside too much of your winnings as you wouldn’t want to risk a lot of it and lose out.
This is where your family comes in. You might want to do the noble thing and give some of your winnings away. Make sure you’ve set aside the exact amount you want to give away and divide it among everyone. You can also set up a fund for other people in need or for charities. However you are not obligated to do this so make sure you’re not running your own pockets dry by giving it all away.
Buying a car or going on a luxury holiday has its benefits, but if you don’t have any plans made for your long term you might want to consider this. If you don’t already have a pension fund set up, consider getting that going. Set up a trust for your children as well. Or you could invest it in your education and get a degree or qualification you’ve always wanted to get. Make sure you’re not just spending it all in the moment as you’ll regret it later on!
Now that you know what to do once you win, good luck! Remember to gamble responsibly.
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