Many Canadians spend nights dreaming of winning the lottery only to come up short. However, there are some lucky few that are able to win a fortune or a small fortune that will turn their life around.
I also look at the lottery as a benefit for some organizations to raise money so if you look at it like a donation it is not that bad a way to spend a few extra dollars (if you have that disposable income).
A $1-2 ticket once or twice a year isn’t going to matter to your budget for the long-term.
I think that it would take strong discipline and planning to not blow all of the lottery winnings but I believe everyone has a different threshold for holding out.
I wanted to share some tips (not that I have ever won the lottery) of what not to do if you win the lottery:
- Do not talk to a lawyer.
According to a survey from convenience store chain Cumberland Farm, when asked who they would call first if they won the lottery, 46% said their significant others. But 10% said their first call would be to their lawyer. And that might actually be the better way to go, financial and legal experts say.
This makes sense as lottery winners are often the target of scams.
2. Tell all your friends and family.
If your province allows it try to keep this mum as long as possible as this will add undue stress to this incredible outcome.
Everyone knows that a major secret like this would travel fast these days with everyone being online and your privacy may get compromised.
There are many instances of strangers or acquantences looking for money from newly minted lottery winners.
3. Take the lump-sum payment
Many winners decide to take the lump-sum payment first without a strategy of doing the math to see which option has the best return.
According to this article on Bloomberg, you should get advice from top professionals (like a tax professional and investment professional) before making this major decision.
Ideally all the members of your team should have experience with high net-worth individuals and can provide referrals of other clients.
This teams will help you navigate your investment options and help you minimize your tax exposure.
Ultimately, a plan of action is needed before any of the winnings are spent.
4. Splurge and make some big purchases.
This is an easy trap to get into. Having access to all of this cash would be tempting (especially if you had any major wants in your life). Recently, I discovered so many exclusive items at a trade show that I never even thought most consumers would want but I was shocked to see the demand for these elusive items.
Cars and fancy trips sound wonderful but there are many major stories of lottery winners being penniless after winning the lottery.