Winning a lottery can change your life
dramatically. People often overestimate just how millions of dollars can change their lives. Here are some real-life examples of bad money management:
- Willie Hurt won $3.1 million in the Michigan lottery but ended up getting divorced, losing custody of his kids, and getting addicted to crack cocaine. Eventually, he was charged with attempted murder.
- Janite Lee won about $18 million in the Missouri lottery and gambled it all away. She ended up in a nasty bankruptcy less than 10 years after winning the lottery.
- William Post won $16 Million in the Pennsylvania lottery and his own brother hired someone to murder him for the money.
A financial windfall can be a curse or a gift depending on how you manage it. Take responsibility and make sure you have everything sorted out before you go crazy with the windfall. Take a strategic and long-term view of how you want to spend the money. Here are some tips for you to manage your cash and stay out of debt!
Pay off “bad” debts first
Paying off your debts is the first thing you need to do. Focus on the ones with a higher interest rate like credit card bills or high-interest loans. When you’re no longer paying these financial charges you have a better chance to stay away from debt!
Start an emergency fund
Starting an emergency fund can protect you from the unexpected and as the lottery winnings change your life, you face unexpected expenses that you may not have had to deal with before. Keep the fund equal to the amount you spend on expenses in 12 to 24 months. This extra cash will protect you from falling into sudden poverty. Keeping the money in a bank with earn interest so that you can make some extra bucks on the side.
Set up college funds for your kids
With the lottery cash, you can set funds for your children to make their lives easier. You can set up savings accounts for college fees. There are various programs for tax-deferred education funds. It can shape up the future of your children and protect your money at the same time.
Pamper yourself reasonably
Treat yourself in the expensive restaurants, take a vacation, go to a spa or whatever suits you! Taking a little off the top of the windfall to treat yourself is fine. Until you are carried away with spending without a second thought. Don’t make splurging a habit and know when it’s not reasonable anymore!
Donate some of the money
Use some of your cash for good deeds. If you have a favorite charity or non-profitable organization, donate some of your cash to them. Moreover, they get the donation and you get the tax write-off, a win-win solution for both!