How to Handle Your Lottery Winnings
A lottery is a form of gambling in which players purchase a ticket, or multiple tickets, for a chance to win a prize. The prizes are usually cash or goods. The concept of lottery is traced back to ancient times, with Moses instructed to distribute land among the Israelites by lot, and Roman emperors having a custom of distributing property and slaves by lot at Saturnalian feasts. In the early American colonies, Benjamin Franklin ran a lottery to raise money for cannons that could be used against the British.
State lotteries are remarkably popular, with more than 60 percent of Americans reporting playing at least once a year. They have broad public support and are generally viewed by politicians as a relatively painless source of revenue. The basic argument is that if people play the lottery, they will voluntarily spend their money on things that would otherwise be taxed, freeing state government to spend its other funds on social safety net programs and services.
But as with most things in life, there are exceptions. The most common lottery myth is that winning the big jackpot is a once-in-a-lifetime opportunity, that the next winner will not be you. In fact, there have been more than 1,200 jackpot winners since the first lottery was introduced in the United States in 1964. While many of those winners have managed to hold on to the money and live out their dreams, there are countless stories of people who have lost it all, spending their windfall on flashy purchases or even getting slapped with lawsuits.
If you do manage to get lucky, there are some basic rules of thumb for how to handle your newfound wealth. One important thing to remember is that discretion is your friend, according to financial planners who have worked with lottery winners. They recommend that you avoid making any big, flashy purchases immediately, and keep the news of your winnings to a minimum even with close friends. It may also be a good idea to consider establishing a trust to keep your money out of sight and out of mind until you are ready to use it.
There is no shortage of stories about lottery winners who end up broke, or even suicidal. They face an onslaught of requests from relatives, neighbors and strangers eager to buy a piece of their fortune, and can easily become overwhelmed.
If you do decide to play, the biggest mistake is to fall into FOMO (fear of missing out). While it’s true that some winners will be able to enjoy the lifestyle they always dreamed of, most will find that they are better off following the advice of financial experts, such as creating a “financial triad” and taking it slow. Then, they can build the life they want without worrying about losing it all.