Help! I Won the Lottery – What Now?
Having the good luck to win the lottery is one thing. Having the financial savvy that lets you make the most of them for years to come is quite another, so just what are you supposed to do?
Two Types of Winners
When part-time trash collector Michael Carroll won a lottery jackpot in the UK in 2002, he bought £100,000 worth of jewelry and a huge 5-bedroom house. His new home became notorious for sex-and-drugs parties that went on for days, as well as for his personal demolition derby in the garden.
By 2007, Carroll had spent all his money except for a handful of investments, and authorities had disconnected his electricity and gas. In 2010, he reapplied for work as a trash collector, and now works in an abattoir.
Alcario and Carmen Castellano of California’s story is the polar opposite to that of the self-proclaimed King of Chavs. They won $141 million in 2001, and are still enjoying the fruits of their good fortune. A family member who works in finance gave them solid advice, and it served them in good stead.
In an interview, 83-year-old Alcario said the couple had to move to a quieter, more secluded area months after their win, as people constantly called or visited to ask for money. He added it was a good thing they had learned to say no. The Castellanos did treat themselves to new cars and some of the finer things in life, but the greater priority for them was setting up a trust that benefits the Latino community. To learn more about it so they could be involved personally, they hired a consultant, communicated with important donors, and went to conferences.
The Sensible Approach
Lotteries around the world encourage winners to get financial and accounting advice from professionals of good reputation. However, there is more to it. Here are the top tips:
First, do not shout the news of your win from the rooftops. As tempting as it might be to Instagram a photo of the winning ticket, do not do it, because it will lead to harassment. Ask the Castellanos.
Next, seek professional advice on long-term investments as well as tax. While waiting for long-term plans to be finalized, make a short-term investment to earn some interest, and clear any outstanding debts. It is also recommended that winners make a spending budget for any money they keep for personal use, as well as for income received from their investments.