$390 Million Dollars – that’s the estimated Jackpot for Tuesday’s MegaMillions drawing.
The dollar amount got me thinking about all the people who’ve gone out of their way to purchase a lottery ticket.
If history is any indication, people will be buying ridiculous amounts of lottery tickets despite the fact that it won’t increase their likelihood of winning.
How many hours have you spent daydreaming about winning the lottery? How many things have you purchased in your fantasies?
Lots of people are fantasising, and praying that winning the lottery will end their money troubles.
But if winning solves your money woes, why is it that 35% of lottery winners declare bankruptcy within 5 years of winning?
How To Handle Sudden Wealth
There are four reasons people lose all their money after hitting the lottery. These losses are often the result of poor financial planning, coupled with being emotionally unprepared to handle wealth.
People who have built wealth slowly have had time for their emotions and habits to catch up to their wealth.
With sudden wealth, this is not the case and the emotional fallout can be destructive.
Emotions come into play in many ways, with relatives, friends, investment ideas, or pleas for charitable donations.
In addition, it is often hard for people to handle how they should live when they suddenly find themselves rich.
If you are not emotionally grounded and don’t have a plan, the wealth will make your life difficult. The key to success is to recognize and deal with the emotions and properly plan your transition to being rich.
So what do you do if you find yourself suddenly rich beyond your wildest dreams?
Here are seven steps to manage sudden wealth:
1. Realize that you alone are responsible for your financial well-being.
Stay involved, read, and learn about financial matters. Don’t leave all the important decisions to someone else. You must be educated and understand fully all the risks, benefits and rewards of investing your money. Yes, you’ll have advisers but you are in the driver’s seat of your financial destiny, not the people you hire.
2. Step back and take time.
Take time to emotionally adjust and understand your new situation. Don’t start making purchases immediately. Give yourself some time to adjust to your new-found money.
3. Choose your path.
What do you want for your life? Who do you want to be? Before you start spending frantically, take time to figure out what kind of life you want now that you have all this cash. Again, take a step back and evaluate first before you start spending.
4. Figure out your financial position.
How much do you have? What are your current living expenses and what is your income? Is it enough to live on and do what you want to do?
5. Assemble a team of advisers.
Ask for referrals and interview as many people as you can; don’t just pick someone out of the phone book. You need to know that you can trust these people to help you accomplish your goals. Take time to ensure your financial future so you don’t end up like so many others who have been bankrupt in short time. You’ll need:
- Estate Lawyer
- Investment Manager
- Money Coach
6. Create a financial plan.
Now that you have your team in place create a financial plan. Keep all members of the team involved and working together. Have joint meetings with team members to ensure there is no miscommunication regarding your money.
7. Implement your plan and enjoy your life.
You have the money; now’s the time to enjoy it responsibly.
If you come into sudden wealth, you don’t have to end up one of the 35% who end up bankrupt. With proper planning and the right emotional attitude, you can overcome the odds and enjoy your wealth for years to come.