The Powerball jackpot is inching up toward $550 million dollars, and our office pool is in place. We are making plans for early retirement, opening that B&B and traveling around the world. Ironically, many past lottery winners who purchased that lucky ticket with dreams of carefree luxury for the rest of their lives, ended up right back where they started, or in some cases, worse than before. The fact is that a lot of us average folks have no idea what a million dollars looks like or what it can do, let alone $500 million dollars!! Many a lucky family have spent their winnings on big new trucks and sprawling mansions only to find out that a million dollars does not go as far as they thought. Don’t let that be you!! Should you happen to hear your chosen numbers on TV tonight, please plan ahead and keep some of these ideas in mind:
1) First and foremost, do nothing with your money until you have taken some time to cool off from all the head-spinning excitement. Put the winnings into a checking or savings account for a little while until you are able to think rationally… or close to it.
2) DO NOT immediately quit your job – some time will pass between the time you watch the news and the time actual funds reach your bank account – in the meantime, you still have bills to pay!
3) Do some research and find a reputable financial advisor whom you can trust – most of us average folks do not have the first clue as to what to do with or how to invest a multimillion-dollar windfall.
4) Pay off debts, loans, and mortgages first, then decide what to do with what is left.
5) Sit down and make a list of things that are important to you: family, health, travel, hobbies, retirement, owning your own business? Use that list as a reference for how to allocate your newly acquired resources.
6) When trying to help out family members or friends – don’t forget the use of trusts for loved ones who might be fiscally irresponsible. Your loved one can then receive income from the trust instead of having immediate access to the entire chunk of money dedicated to them.
7) Try to do things with the money and not buy things – activities and experiences have been proven to make people more happy, and create more long-lasting memories, than just stuff.
8) Remember – a million-dollar house comes with hundreds of thousands of dollars per year in taxes, utilities and maintenance. So does that new business you are itching to start. Always think through all of the potential future costs and include them in your calculations of what you can afford.
9) Don’t spend all of your money at once – if you give yourself some downtime between fun purchases, you will have that many more occasions to look forward to and be excited about something new and fabulous.
10) Last but not least – don’t forget to be nice to the less fortunate. Give back – charity is another one of those transcendent feel-good experiences. (Of course, beware of people who may try to use you and obtain money under false pretenses. )
Think the above suggestions are all just common sense? Think again. Just ask Lisa Arcand.