$640 Million Dollars - that was the amount of the Mega Millions Lottery Jackpot this past week. From all accounts it appears there were three lucky winners.Image of Maureen Campaiola
The frenzy got me thinking about all the people who went out of their way to purchase a lottery ticket and from what I could gather, many people bought ridiculous amounts of tickets despite the fact that it didn't increase their likelihood of winning at all.
What did you do?
Did you go crazy, spending a small fortune on tickets in the hopes you would be the winner? How many hours did you spend day dreaming about your winnings and everything that you would buy with your new found wealth?
Did you secretly believe you would win this money so your troubles would be solved? Then why is that 35% of lottery winners declare bankruptcy within 5 years of winning?
There are four reasons people lose their sudden winnings. These losses are often the result of poor planning and being unprepared emotionally to handle wealth. People who have built wealth slowly have had time for their emotions and habits to develop to catch up to their wealth. With sudden wealth, this is not the case and the emotional fallout can be destructive. Emotions come into play in many ways, with relatives and friends, investment ideas, or pleas for charitable donations.
In addition, it is often hard for people to handle how they should live when they suddenly find themselves rich. If you are not emotionally grounded and don't have a plan, the wealth will make your life difficult. The key to your success is to recognize this and deal with it emotionally and plan your transition of the wealth.
So what do you do if you find yourself suddenly rich beyond your wildest dreams? Here are the seven steps to manage life and money when you hit the lottery or come into sudden wealth overnight.
- Realize that you alone are responsible for these funds and your financial well-being. Stay involved, read, and learn about financial matters. Don't leave all the important decisions to someone else! You must be educated and involved and understand fully all the risks, benefits and rewards of investing and using your money. Yes, you'll have advisors but you are in the driver's seat of your financial destiny, not the people you hire.
- Step back and take time to emotionally adjust and understand your new situation. Don't start making purchases immediately. Give yourself some time to adjust to your new found wealth.
- Choose your path. What do you want for your life? Who do you want to be? Before you start spending frantically is the time to figure out what kind of life you want now that you have all this cash. Again, take a step back and evaluate first before you start spending.
- Figure out your financial position. How much do you have? What are your current living expenses and what is your income? Is it enough to live on and do what you want to do, as identified in #3?
- Slowly and thoughtfully assemble a team of advisorsand gatekeepers. Ask for referrals, interview many different people. Don't just pick someone out of the phone book. You need to know that you can trust these people to work with you to accomplish your goals and ensure your financial future so you don't end up like so many others who have been bankrupt in short time. You'll need:
- Estate Lawyer
- Investment Manager
- Money Coach
- Create a financial plan with your team. Keep all members of the team involved and working together. Have joint meetings with team members to ensure there is no miscommunication regarding your money.
- Implement your plan and enjoy your life. You have the money; now's the time to enjoy it responsibly.