Winning the lottery changes your life—but not always for the better.
While you may have imagined spending your jackpot on trendy downtown lofts, Arabian horses, or a Lamborghini Countach, many winners later end up bankrupt or regretful.
The emotional impact of winning makes the reality more complicated. “The money comes in, but you really have to deal with relationships, emotions, and guilt,” says Robert Pagliarini, president of California-based financial firm Pacifica Wealth Advisors and author of the book “The Sudden Wealth Solution: 12 Principles to Transform Sudden Wealth Into Lasting Wealth.”
Two emotions tend to take over: euphoria and fear. People are ecstatic that they’ve won, but also scared because they don’t know what to do, he says.
Here are some first steps to help you rein in your emotions and avoid expensive mistakes:
Video by David Fang
You’ll have to make a lot of complicated decisions, like how to claim your prize, whether to pick the lump sum or the annuity, and how to invest your winnings. One of your first moves should be to hire professionals including an attorney, financial advisor, and accountant, who can help walk you through those options.
“There are some things winners need to worry about. If you don’t do it right, you become a target for a lot of people,” says attorney Jason Kurland, also known as “The Lottery Lawyer,” and a partner at New York-based law firm Rivkin Radler. Kurland has represented more than 35 lottery winners since 2011 and advises clients on what to do when they win.
Winners instantly become the center of attention, not only from the media, but also from friends, family, and scammers. Everybody wants a piece of that jackpot, and they won’t be shy about it. Kurland’s advice? “Keep it quiet. The fewer people who know, the better.”
Some states let you claim lottery winnings anonymously, which can help protect your privacy. But doing so isn’t always easy—yet another reason to make sure you have the help of advisors from the get-go.
With more money can come more problems. Take time to assess your goals and make a plan, Pagliarini says. That should include ideas around how and when you’ll spend your money, and gifts or donations you’d like to make. Having some financial guard rails in place can help you steer clear of impulsive decisions you’ll regret.
“Those are the kinds of things that can make you feel like the money is a curse. And that’s what we’re trying to avoid,” he says.
Check out Don't Fall For These 5 Myths About Money