“If you've never had the comfort of financial security before, if you were really eking out a living from paycheck to paycheck, if you've never managed money before, it can be really confusing. There's this false belief that no matter what you do, you're never going to worry about money again.”
It’s safe to say that more than a few of us bought Powerball tickets this week with the hopes of winning the $550 million jackpot. And yet we all know that the odds of winning the jackpot are extremely low – 1 in 175,223,510.00. But let’s assume that you did in fact purchase the winning ticket…what would you do with $550 million?
Most people say they would first purchase a new car and a new house, take a vacation and then take care of family and friends. Unfortunately, if you take this approach with your millions, you won’t be a millionaire much longer.
The number of lottery winners who wind up in financial ruin, despair or both are increasingly common. As told in a recent Detroit Free Press article titled “Windfall pitfalls: Big Powerball winners share lessons, risks of success,” an estimated 70 percent of people who land sudden windfalls lose that money within several years.
There are, however, ways to prevent this economic ruin. People must plan for their psychological needs as well as their financial strategy. Past winners and financial planners offer some advice: make and stick to a budget, invest wisely, learn to say no and be prepared to lose friends. One past lottery winner suggests that even before you claim your ticket, find a lawyer and a financial adviser and start building a strategy.Please visit our website for information on elder law and estate planning issues, and sign up for our free monthly e-newsletter. The archive on our website contains numerous blog posts on these legal areas as well.
References: Detroit Free Press (November 28, 2012) “Windfall pitfalls: Big Powerball winners share lessons, risks of success”