Like a lot of people this week, my wife and I have been seduced by the media attention surrounding the half-billion dollar Powerball lottery prize – the nation’s second biggest lotto jackpot ever.
And so, last night, we bought a single $2 ticket. Not so much for the odds of winning all that money (statistically, after all, you are about 175 times more likely to be struck by lightning). We simply want to be able to play the “if I won the lottery…” game. Something you can’t do if you never buy a ticket.
If not tonight – then one of these days – one or more people will go to bed like you and me, with average jobs, average bank accounts, average debts, average lives, and wake up with a lot of money – potentially more than Mitt Romney’s entire net worth (if a single winner snatches it all).
So let’s say it’s you. What will all of that money do for you?
We’ve all heard the stories of the lottery’s winner’s curse: tales of betrayal, deceit, and divorce in the wake of multimillion-dollar windfalls. There are lottery winners who squander everything in a few years. There are others who are afraid to spend a penny. In both cases, winning the lottery does little positive for their lives.
The rest of us love to believe we would be better winners.
We would pay off our debts.
We would help close family members in need.
We would indulge a little – a vacation, a new car, maybe even a bigger home (but something modest, still).
We would invest wisely to provide a reliable income for the future.
Hopefully, we would use some of the money for a greater good.
I’m sure it’s not that easy. We humans are irrational creatures easily influenced…by the spotlight’s glow, the sudden fond attention of long-lost friends, and of course, the subtle influence big money tends to bestow upon its possessors.
I write financial advice for regular people, not multimillionaires. But soon somebody will wake up millions of dollars richer, but still regular…at least for a little while longer. My advice to them is the same as it is for all of us, however much (or little) money you have: Spend some now and save some for later.
Of course, think before you spend (or in this case, before you cash in that ticket). Pause. Breath.
- Cover your immediate needs.
- Provide for a rainy day.
- Pay off debt.
- Invest for your future income and your children’s future.
- Give back.
- Indulge in things you want. (But remember, it’s okay to indulge a little along the way to keep life fun.)
The more money you have, the more concrete this plan needs to be. When you can afford it (as a lottery winner surely can), a team of professionals is a must: a financial planner, a tax advisor, and an estate attorney.
To the winner(s): Good luck. You’ll probably need some more of it.