What To Do If You Win The Lottery [Step-By-Step]

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It’s a dream, right? You see those magic numbers on your lotto ticket, and all of a sudden, your normal life woes are taken care of — no more boring desk job, no more beat-down car, no more less-than-perfect house, no more wardrobe you hate. You can change all of it because you’re filthy rich. You’ve hit the jackpot.

But hold up. Winning the lottery doesn’t always end in a happily-ever-after scenario. One-third of all lottery winners end up going bankrupt, and 70% of lottery winners spend all of their money in five or fewer years. In other words, winning the lottery, rather than solving all your problems, could leave you in a worse place than where you started.

You Won. Now What?

How can you make sure that you don’t end up as just another grim statistic? Here’s what to do if you win the lottery.

Don’t Tell Anyone

Seriously. Do not tell anyone. You cannot tell a single person about this — at least not at first. It’s a huge risk. Once you see you’ve won the Powerball or whatever your gamble of choice, keep the news to yourself and off of social media. Don’t tell any of your family members, even those you trust. Don’t tell your best friend or your coworkers.

Do tell your spouse, but ensure that they’re under the same strict do-not-talk-about-it rule.

In some cases, you are required by law to report your winnings, depending on the state where you live. Obviously, do this if that’s the case, but otherwise, keep it quiet for as long as possible.

What might happen if you don’t, you ask?

In addition to just the odd acquaintance showing up at your doorstep in sudden need of cash, you’ll also be putting yourself at risk for violence, in worst-case scenarios, as well as putting it out there for every scam artist that you’re a good target.

Keep Yourself Covered

You want to ensure that even if you lose your winning ticket, you’re still covered and the money is still yours. How? Sign the back of your lottery ticket.

In order to get your winnings, you’ll have to show a ticket with a signature that matches the signature on your standard identification (i.e., driver’s license). If you lose your ticket, some fraud could come along and sign the back and claim that they were the winner all along — and you’d have very little to prove them wrong.

Additionally, take photos of the winning ticket and put it away somewhere safe. Think: a lockbox or safe deposit box at the bank. Whatever you do, don’t just keep it in your wallet.

See How Long You Have to Claim Your Prize

You may be tempted to rush out and claim your winnings immediately, but there’s good reason to hold off. If you’ve won a significant amount, claiming the prize will alert the media and bring attention that you might not want.

Additionally, claiming the prize later, after you’ve formulated a plan for the winnings with the right professionals, means you won’t just have thousands of dollars sitting around in your bank account, where you may be tempted to spend.

In general, you have at least six months to claim a lotto prize, though you might not necessarily need to wait that long. Check whatever the rule is for your particular win.

Get Some Professionals on Your Side

Those professionals you’ll want to gather around you? They include both a lawyer and a financial advisor if you don’t already have them.

The lawyer will especially come in handy when it comes to protecting your anonymity by acting on your behalf. For example, the lawyer can collect the prize money for you and even set up an anonymous fund for the lottery to write the check out to, rather than putting your name on all the paperwork.

The financial advisor is great to have around because most folks just don’t know what to do with a tremendous amount of money. Do you invest in a new business? Do you put it all in the stock market? Do you buy a new house? What’s smartest?

A financial advisor can talk to you about your goals and the lifestyle you want to lead and then make the best recommendations for your particular situation, putting together a financial plan for your family.

Related: 11 Top High-Yield Savings Accounts [Who Doesn’t Love Watching Their Money Grow?] 

Don’t Quit Your Job… At Least Not Right Away

Okay, so it may be really, really, really tempting to quit your job immediately upon winning the lottery, but hold off. That’s another significant way of drawing unwanted attention to yourself.

Instead, if you want to quit your job eventually, start easing out of it. Maybe ask to go part-time for personal reasons. Cut back on your hours. Simply stop caring as much (while being careful not to burn any bridges).

Calculate Your Costs and Make Some Difficult Decisions

Before you can begin planning where you spend all that sweet dough, you’re going to have to get an idea of what you’re winning — because it’s certainly not the number that Powerball is advertising. Your payout will be heavily taxed.

Beyond this, when you decide whether or not to take a lump sum of money or the annuity payments that are an option, you’ll have to figure out how that impacts taxes as well. Do you want to pay a ton of money to the federal government up front, or would you rather have consistent payments for the rest of your life, of which you’ll still have to give Uncle Sam his cut?

Your financial planner can help you narrow down and decide which option is best for you, but most financial professionals advise going for the annual payments.

Hide Yourself

So you might wait to tell anyone about your lotto win or make any significant changes to your lifestyle, such as quitting your job or buying a new house. Eventually, people will (very likely) find out about your lottery win. Even if there’s no press or you don’t put your name on the check, if you tell your brother, who tells his new girlfriend, who tells her parents, who tells their friends… well, things will get around.

To protect yourself from those who come a-calling for handouts eventually, take some extra precautions by changing your phone number and making your social media accounts private. You may also want to consider setting up a PO box.

Don’t Overestimate Your Financial Progess

Sure, you have a lot of money now — but don’t forget that you didn’t actually do anything to earn that money (except maybe buy a weekly lotto ticket when picking up a six-pack at the gas station). Don’t just assume that now that you have a lot of money in the bank, you’re suddenly a financial genius. You’re not.

That means don’t try to play the stock market on your own. Don’t try to invest in a million different things. Don’t throw it all away in an effort to make even more money. Instead, make sure you’re set up well for the rest of your life and then work with a financial advisor to invest any additional cash.

Manage Your Relationships

Everyone wants to be nice to their family and friends. Still, you may suddenly find yourself feeling extra guilty around them even when they’ve done nothing to make you feel that way (though it’s almost guaranteed that eventually, someone will make a snide comment about not having as much cash as you).

In addition to having financial advisors and lawyers on your side, now may also be an excellent time to work with a therapist or counselor too. This will help you manage your relationships and how you engage with others around you regarding your newfound wealth.

You may find some friends are suddenly very awkward around you, while some suddenly expect you to treat them to all-expenses-paid vacations or a new car. You may lose some friends, and you’ll certainly not be wanting new ones, many of whom may prove to be fake. A counselor can help you navigate these evolving interpersonal relationships.

Get Your Affairs in Order

Even if you’re in your 20s when you win the lottery, you’ll want to take into consideration your estate. If you win big enough and do some investing, it’s likely you’ll still have some cash leftover, as well as some assets when you die, and you want to ensure all of that is taken care of right away.

So, in addition to your financial advisor, lawyer and therapist, also look into getting an estate planning attorney. Beyond helping you set up a will or trust, they can also help with things like prenuptial agreements, if you need one.

Related: The 11 Best Investment Apps For Everyday Investors [Guide] 

Pay Off Your Debts

This is likely something your financial advisor would tell you, but once you have your winnings, it’s time to pay off some debt. After all, there’s no reason not to keep paying interest on outstanding debts if you don’t have to — it’s just throwing away money!

So, pay off your house, car, credit cards, student loans, medical bills, you name it. Pay it off and start fresh.

Bulk Up Your Savings

This is another thing your financial advisor will likely stress but still bears repeating. No matter what you invest in or how you want to treat yourself, make sure you’re saving, too. That means saving for medical expenses, emergencies, retirement, your children’s college and the like.

Michael Hammelburger, The CEO of expense reduction consulting firm The Bottom Line Group shared with us, “If you win the lottery, you should look into opening a high-yield savings account right away so you can earn the best APY on the money you end up keeping in savings.”

Ensure you and your entire family are set up for a healthy, wealthy life for the long-term before you begin purchasing the fun stuff.

Set Boundaries for Your Giving (and Spending)

Yes, even millionaires and billionaires need budgets. Otherwise, you’ll end up throwing away cash, and that number in your bank account will begin dwindling before you know it.

Set up a budget for all of your regular expenses, from housing and entertainment to taxes and bills.

Additionally, set up a budget for any giving or charitable contributions you might want to make and then stick to that budget. While giving is excellent, you don’t want to give it all away. If you have a charitable budget and set up a formal charity, you can refer anyone who asks for a donation to this charity, which can take applications for annual gifts. This saves you the trouble of saying ‘yes’ or ‘no’ to every single person who asks for cash.

Related: How You Can Be Financially Independent And Retire Early (FIRE) 

How to Win the Lottery

But before you can think of any of the above, you have to actually win the lottery. What’s the best way to go about this? While some lottery winners are purely lucky and win on chance, others have a bit more method to their madness.

Play the games that actually win

Before you start playing the lottery, look for the games that give you the best odds of winning. This will differ according to your state, unless you play national lotteries like Powerball and MegaMillions. Look into your options and see what will give you the best chances of winning, even if it means winning less cash overall.

Choose your numbers carefully

One seven-time lottery winner recommends not choosing numbers that fall in the same number group or numbers that end with similar digits and not choosing consecutive numbers. You can use lottery apps to track the best numbers to select.

If you don’t want to share any of your winnings with another person because they chose the same numbers as you, try to use rare numbers.

Keep playing

You can’t win if you don’t play. Buy tickets regularly and buy more than one ticket at a time for a greater chance of winning the lottery.

Bringing Home the Big Bucks

Hopefully you feel well equipped to handle your new life after winning big in the lottery. And if you’ve already won, best of luck turning your winnings into a lifelong fortune for you and your family.

You might also be interested in: Life Insurance Talk [Your Top Questions, Answered]

What To Do If You Win The Lottery:

  1. Don’t Tell Anyone
  2. Keep Yourself Covered
  3. See How Long You Have to Claim Your Prize
  4. Get Some Professionals on Your Side
  5. Don’t Quit Your Job… At Least Not Right Away
  6. Calculate Your Costs and Make Some Difficult Decisions
  7. Hide Yourself
  8. Don’t Overestimate Your Financial Prowess
  9. Manage Your Relationships
  10. Get Your Affairs in Order
  11. Pay Off Your Debts
  12. Bulk Up Your Savings
  13. Set Boundaries for Your Giving (and Spending)

Holly Riddle

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