What to do and not to do if you come into a windfall
Whilst “wealth” is something that is dreamed of by everyone, a sudden influx of cash will undoubtedly have an impact on your life and goals.
Going from your average day having your normal daily income to walking into large amounts of money can sometimes be bittersweet. On one hand, the cash can create a new sense of fun, giving you financial freedom- however, on the other, understanding what you need to do with the funds can be overwhelming. Luckily, there are steps that you can take that will guarantee your finances are protected and secured.
This article will cover what to do if you win the lottery.
4 tips for what to do if you come into a windfall
Hold your tongue
The first thing you need to do is decide whether you want to make your newfound wealth public knowledge.
If family members and friends become aware of your good fortune and wealth, you may find people suddenly appearing into your life and they will all be asking for the same thing – your sweet, sweet money. However, try to refrain from being over generous or too charitable as this can be one of the fastest ways to lose the money you won for yourself!
I understand it is difficult to hide your new lifestyle from the people who know you best. However, it may be worth making up a ‘cover story’ if needs be and make sure to never share exact information of the amounts of money involved in your new luxury life.
Take a breath and think
The old proverb, ‘The art is not in making money, but in keeping it’ also relates to those who receive a huge windfall from winning the lottery. Due to the unexpected way that you came into the cash, it is easy to think differently about the lump sum of money you won, compared to how you review and consider the money you have worked hard to earn throughout your life.
So, it is vital that you do not get carried away with the lavish lifestyle your new wealth affords you to have, but instead to really consider the situation and the amount of money and plan ahead. During this initial period, it can be a good idea to tuck away your money into an easy access savings account for a few months or so.
Ask for help
Most of us only think about how we would spend a windfall. However, we forget to think about or are not even aware that a windfall comes with a few logistical bumps. Issues such as taxes, financial long-term impacts and legal requirements must be taken into consideration.
In order to handle a windfall, you need to have professionals to help you throughout. These professionals should have experience with clients who have had similar abundant sudden arrivals of cash. Here are some professionals you might consider working with and how they could potentially help you:
Certified Public Accountant (CPA) or tax advisor – To help conserve your new assets and create a tax strategy for the years to come.
Financial Planner – To create a plan to manage old debts and to save for you and your family’s future. You normally don’t hear a rich person talk about their spending habits, normally it is their investments that they care for and gain from. With this extra money at your hands, you could generate even more by investing your cash.
Estate planning attorney – To create an estate plan that considers your windfall assets. It may be a chore that you would prefer to put off, especially when you are still celebrating your new financial security, but the sooner it’s done, the better. While you may have been happy for your children to inherit a few thousand pounds, for instance, when they reached 18, you may feel very differently about them inheriting a lot more.
If you need to find a lawyer to complete your will there is a free service from The Law Society for anyone looking for legal services in England and Wales that are regulated by the SRA.
Consider the long game
It can be tempting to spend an unexpected windfall on something short-term, a sportscar or a luxury holiday, for instance, but if you don’t have much in the way of savings for your retirement, you should consider ploughing some of that money into your pension pot.
It’s certainly tempting to walk away from the 9-5 grind but staying employed is a smart long-term tactic to preserve your windfall. If you genuinely can’t stand your current vocation, however, a financial windfall can offer the breathing room to help you pause and decide what’s next in your career.
Find out how much you can squirrel away for retirement with The Pensions Advisory Service.
What not to do if you fall into a windfall
Refrain from hoarding your windfall in cash for many years. Cash in the bank is a great place to start, as mentioned previously in this article - however, there are drawbacks.
The biggest drawback is that the interest gained on bank deposits is dependent upon ordinary income tax, and your new rate-of-return rarely exceeds the inflation rate. Because of this, your net real rate-of-return can be negative, which means you sacrifice and lose purchasing power over time. This means it could negatively impact your big financial winnings.
Another thing to not do is skip informing yourself and learning about personal financial planning. Learning about how to handle your new large amounts of money may feel intimidating at first, however you can start with baby steps! There’s no rush. Reading esteemed online publications from independent sources is a great place to start this journey on educating yourself! You can also sign up for personal financial planning courses at a local and online colleges.
As you become better informed, you will have a better understanding on your financial risks and benefits of long-term investing.
However, resist in investing in friends and family members. There are many people out there with “get-rich-quick schemes” or ideas they will describe to you as “can’t miss” investments. Escape these at all costs and being manipulated because those people are only looking out for themselves and rarely have your best intentions at heart.
How to increase your chances of coming into a windfall with Lottoland
So, although coming into a windfall seems daunting, it’s everyone’s dream to win the lottery. At Lottoland they not only give you the chance to bet on lotteries from around the world they give some expert tips on what to do with the money if you hit the jackpot.
Your next chances to become a millionaire is by betting on lotteries with Lottoland that occur every 4 minutes such as KeNow with a jackpot of £1 million and Keno 24/7 with a jackpot of £10 million! Additionally, you can bet on Multi Keno to increase your chances of winning £43,000.
In addition to this, Lottoland also gives you the chance to bet on MINI Lotto for as little as 35p for a potential of winning a whopping £70,000! Lottoland also offers the chance to bet every hour with Millionaire GO! With a chance to win a jackpot of £25 million and Cash4life with a jackpot of £1,000 every day! Allowing you to increase your chances of becoming the next millionaire as best as possible.
All in all, think before spending! As exciting as the surprise can be, it is worth to think smart, take control of the money and make a great plan to spend or invest your lottery winnings…. But remember to enjoy (responsibly of course). Goodluck!
Please gamble responsibly. You must be over 18 to play the lottery. When the fun stops, stop. Be Gamble Aware – for help and guidance click here.