Big Lottery Jackpot Winners and What They Learned
Many experience fantasies about winning the lottery. That dream became a reality for a local family recently. Still, it's very illuminating to realize that a lot of the winners simply do not have the skills to handle a large amount of cash. In fact, many ended up with empty pockets and file for bankruptcy within a few years or sooner. Is it the lottery curse or simply poor money management skills? Perhaps, millions think about trying their luck with the lottery. Here are tips on managing those lottery winnings successfully.
The average lottery winner goes on a very destructive spending spree. Buying friends, family, and associates gifts. Purchasing expensive gadgets, luxury cars, homes, clothing, and luxury trips. The best course of action is to control spending. For example, they should splurge about ten percent of winnings on all those frivolous, luxury items. Invest the largest portion of the winnings for the future.
Avoid High-Risk Investment Schemes
Outsiders bombard millionaire lottery winners with all types of high-risk investment schemes that claim to double or triple their money in a year or less. Many lose a sizable portion of their winnings investing in those schemes. Often, the lottery winner is very naive about financial investments and returns on investments. The best course of action is to avoid risky investment schemes. If it sounds too good to be true, it's probably a scam.
Learn To Diversify Money
Surprisingly, many of the mega-million winners did not listen to sound basic financial advice that states that one should learn to diversify their investments to reduce the risk factor. Let's face facts. All investments carry a certain amount of risk. However, those that place their money in multiple investments, will not lose everything if one investment goes south. It is also a sound idea for the lottery winner to seek advice from a financial expert as soon as possible. Question the financial adviser concerning diversification of their investment. Question financial advisers about governmental tax breaks. Take finance classes or read books on financial investments to learn more about getting the highest return on money invested.
Avoid Spending Initial Investment
It is important for lottery winners to realize that budgeting isn't a bad word. Many lottery winners take the lump sum of money won and start spending like there is no tomorrow. Soon, their winnings are gone. The fact is that there is a very simple method to maintain a very good income from the winnings. Simply avoid spending the principal. This is the original amount of money that was part of the investment. Instead, spend the income. This is a very easy way to guarantee the winner that they will have a future income. Another method is to only draw on rental income, shares, or stock income. Let the original investment remain to draw upon in the future.
The lottery winners that win big cash should follow the simple advice outlined in this piece to make sure that they control their money and avoid financial mistakes.