Winning the lottery can be a very overwhelming experience, especially if you are dealing with millions of dollars in earnings. Being handed over that kind money will naturally tempt you to splurge on all the things you’ve missed before because of your lower financial capacity. You might immediately go on a shopping spree, series of travels, handing some of your winnings to others, and so on.
Sure, there’s nothing wrong about pampering yourself with your well-deserved reward or sharing it with someone. However, remember that the cash you got after winning the lottery will eventually run out. Just look at the celebrities right now who used to earn millions but were forced to file for bankruptcy because of bad spending habits. Therefore, you should make the most out of your lottery earnings by using it wisely.
Here are the top three things that you should prioritize after winning the lottery:
1. Pay Your Taxes
If your winnings is taxable, be sure not to neglect your obligation to the government in order to avoid penalties or being on the receiving end of a suit. Consult an accountant who will help you understand your options and aid you with all the paperwork associated with filing your taxes.
Normally, you can select whether to get your money in a lump sum or in installments. Getting all your cash winnings right away will require you to cough up nearly 40% of all your duties. If you want to control your spending, you can also choose to get it in the form of an annuity, which will let you pay your taxes after winning the lottery gradually.
The bad side of the latter though is that taxes are subject to adjustments, so you might end up paying more than what you are supposed to back when you won the jackpot. This is the reason why you need an accountant to explain the benefits and repercussions of your choice.
2. Settle Your Debts
Debts can bubble out of control when left unchecked. If possible, pay all of them before they incur more interest. This will be a great time for you to repair your credit score if you used to have a bad credit report prior to winning the lottery.
Having a good credit history will put you on a good standing with financial institutions and to every transaction that you will have to deal with. Be sure not to miss out on this opportunity.
3. Invest Your Money
Make your money earn by investing it. However, you have to do this in a right way. You can deposit your winnings in a bank for it to earn interest. You can also put some of it in bonds, stocks, mutual funds, insurance, and others.
Hire a lawyer and financial adviser from a reputable firm to help you manage your money properly. They can explain to you the pros and cons of each mentioned investment options as well as guide you along the way should you have any concerns regarding your decision later.
Be sure not to miss out on any of these after you have won the lottery. Keep a balance between enjoying the fruits of your prize and keeping some of them to ensure your financial security, so that whatever happens, you and your family will always have a backup.