What not to do if you have won the lottery
If you really need to read this post, most likely is because you or someone close to you have won the lottery. First of all, congratulations on being so lucky. Now it is time to celebrate, but that doesn’t mean time to lose your mind. If you have won a big money prize, you could make a lot of bad decisions. We have created this post in order to try to help you avoid those bad decisions.
If have the winning ticket in your hand and you are still feeling shaky after just receiving the news that changed your life, try to relax. With such excitement and nervousness, the chances of making a bad decision increase. Find out with us what not to do if you win the lottery.
Things to do (and not to do) after winning the lottery
1.- Don’t tell anyone you won the lottery
Telling everyone around you that you have won a big amount of money is usually a big mistake. At best, all you are going to achieve is to attract some opportunists. As a general rule, the only people you should to talk about your lottery winnings are your partner and children (if you have any), tax advisor and bank manager.
2.- Don’t quit your job
First of all, you must think if the money you have won is enough to leave your job or live the rest of your life without working. Don’t make rash decisions that could turn against you later.
If you have won a very big amount, think about investing your earnings on a business you really like and that will allow you to live without stress. If you are not at retirement age, it is good to continue working.
3.- Don’t spend you money uncontrollably
The most common mistake that people who won a big lottery prize tends to make is to start spending money quickly and uncontrollably; they start buying flats and houses, premium cars, having parties, going on dream hollidays, buying luxury products… Until the money runs out.
Unfortunately, there are countless cases of people who went bankrupt after winning the lottery. This is, without a doubt, the most important piece of advice of all.
4.- Don’t manage your money without the help of a consultant
Even if you are disciplined with your expenses, managing a humble budget is one thing, but when you suddenly have a much higher amount of money, it is very likely that you start spending more and thinking about making investments. You should know what you can afford to spend each month with your lottery money; investment opportunities will also come up.
It is very important to have professional advice for your current expenses and to advise you on the pros and cons of possible investments and businesses. There are many cases of bad investments made without advice after winning the lottery.
5.- Pay off your debts
Many of the lottery big prize winners admit that the first thing they intend to do with the money won is to pay off debts, what in Spain people is usually known as “to patch up holes”.
The most common debts that are usually settled with lottery prizes are:
- Mortgage: it is the first debt that most of the awarded people usually get rid of.
- Personal loans: credits for car purchases, home refurbishments, etc.
- Credit cards: it is very important to repay debts related to credit cards, especially when dealing with revolving cards.
- Debts in connection with outstanding payments: these are the ones that one must get rid of immediately, since they are the ones with the highest interest of all.
6.- Be carefull with shared lottery tickets
If you have played half and half with another person or with the participation of several people, be very carefull with who you entrust your ticket or tenth-note ticket. You cannot be 100% sure that your best friend will not steal the money and disappear on his/her way to a tax haven, so it is better to be safe than sorry. After all, if the prize is a significant prize, it is an amount of money that serves as passport to change your way of life.
How do you cash a big lottery prize?
First of all, before you can make any decisions, and along with the happiness of the moment, the Treasury will arrive to claim their piece of the cake. If your prize is greater than € 40,000, you will have to declare it, and the State coffers will take 20% of the total amount above those € 40,000. Since tickets with prizes of more than € 2,000 must be deposited in a bank, the bank itself will be in charge of declaring it to the Treasury. It is the first procedure of all the procedures that you will have to do if you win the lottery.
Something very important that you should do if you win the lottery is not to cash the prize money in the banks of your neighborhood, town, etc. Surely, whether you want it or not, the word will have spread. If winning a significant lottery prize in your area causes a big buzz and commotion, attract the press, etc., the only thing you will achieve is to make the local bank branch workers green with envy. They are not going to rob you, but perhaps they will try to take advantage of your buoyant economic situation to get a much more advantageous deal for the bank than for you.
Besides, even if it's not in a neighbourhood bank, don't go to the first bank you come across. If you do not want to lose money, it is a key step that you should not take if you win the lottery. It is important that you choose the bank from among those that have an agreement with Loterías y Apuestas del Estado.
It is best to look for a bank that allows you to open commission-free accounts and that offers you profitable investment products. To facilitate this process, we provide you this link that will take you to Help 2 my cash, one of the most renowned bank comparators.
How do you manage the money won in the lottery?
There are endless ways you can take, but since in this post we are focusing on what not to do if you win the lottery, we will rather tell you how to manage the money.
Along these lines, it should be mentioned that most experts recommend investing up to 90% of the prize we have just won. This is recommended to ensure that this money continues to generate profitability and doesn’t lose value, and to prevent most of that prize from disappearing in a short time as a consequence of living the good life.
You would not to be the first one who has just received a lottery prize and burns it in a few months by making absurd purchases, giving disproportionate tips, giving a helping hand to people you know, etc. If you want the money you have won to help you for the rest of your life, that is one of those things you should not do if you win the lottery.
In the case that you want to take advantage of the money that has just fallen from the sky to pay debts, in other words, “patch up holes”, stop for a second to think if it really pays off. Of course this is a sensible option in terms of the use of money, but perhaps it is not the option that optimizes the lottery prize money the most, since in times of low interests, paying off loans may be less attractive than making a good investment. Nonetheless, we are only giving you recommendations on what not to do if you win the lottery, or even better, what is less recommended, but we do not have the absolute truth. If paying off your car and paying off your mortgage is going to give you a huge relief, who are we to tell you not to, go ahead.
What is never recommended is to leave the money stationary, because you will let it lose value instead of making it profitable. If you leave the money stationary, inflation will gradually reduce the value of the money, and therefore you will lose purchasing power.
Finally, you should be very careful if someone offers you complex bank products. It is likely that any bank tries to take advantage of your situation, that you do not stop to look closely at the risks of certain products, in order to close agreements with very advantageous conditions for them.
Now that we are concluding this post, not only do we hope that you liked it, but we also hope that we have been able to help you manage correctly the amount of money that you have just received. In case thatyou haven’t won the lottery and you are just reading this post for the sake of killing time … what are you waiting for to try your luck?
