What To Do If You Win The Lottery

As a financial planner, I’m obligated – I guess – to share my thoughts on this week’s record-huge lottery jackpot.

True, the odds of winning the $1.6 billion Mega Millions prize are an astronomical 1 in 302.5 million, but one of my clients or readers could win, right? (I actually have advised lottery winners in the past.) How would it look if I wasn’t ready with advice for America’s newest billionaire?

Before I start dropping my pearls of lotto wisdom, let me point out that while there are many reliable roads to financial security, buying lottery tickets is not one of them. Your lottery play should be a lark, a diversion, an excuse to dream, a basis for coffee machine chitchat. You can absolutely one day be worth millions. But your “ticket” will be years of hard work and discipline.

A quick aside to small business owners: If your employees are pooling their money to buy Mega Millions tickets, you better jump in that pool with both feet and a fist full of cash. Otherwise, if your crew wins, you will be running the store all by yourself starting the morning after the drawing.

If you do win the Mega Millions, remember these three rules. 

Feel free to print this and paperclip it to your ticket(s).

Watch your spending. Seriously. We’ve all seen stories of lottery winners who frittered away their millions in the blink of an eye. You can buy a house. You can buy a boat. But you can’t buy three houses and three boats.

Umm, OK, a disclaimer. The above advice doesn’t really apply to this $1.6 billion jackpot. It’s hard to imagine how someone could screw up this win. If the Mega Millions winner plopped all their winnings in an ultra-conservative Treasury bond fund, she would receive about $45 million in annual dividend income.

Do not buy a restaurant. To expand on this ironclad rule, do not invest in your cousin’s/best friend’s/co-worker’s restaurant “concept.” There is a reason your cousin/best friend/co-worker hasn’t yet opened their dream eatery. It’s because people with enough money to bankroll a restaurant are smart enough to know that restaurants are a terrible investment.

Establish a Moocher Defense System. Even if the Mega Millions winner proves to be an orphan who has lived as a hermit in North Georgia mountains for 20 years, he will be besieged by folks seeking a piece of the action based on some personal connection.

Be ready for this inevitability. Come up with some reasons why – while you’d love to help – you cannot give/lend any money. You could say the lottery proceeds have been placed in a trust. Or that your newly-created Family Office handles such requests, and only requires 30-40 pages of forms to be completed before they consider your request.

Work with a trusted financial advisor. Coming into a huge sum of money has more than a few upsides. It also brings genuine challenges and new considerations. Be smart. Don’t go it alone. Find a money pro to help you navigate your new reality. Take the time to select someone you can trust and with whom you are comfortable.

OK, you are now ready to win the Mega Millions. I hope to see you on the TV news, swimming in a pile of cash like Scrooge McDuck.

Previous ArticleNext Article