As the Powerball jackpot skyrockets to historic highs, reaching $1.5 billion on Tuesday, millions of Americans fantasize about becoming a billionaire overnight. However, with great lottery winnings also comes great responsibility – at least with regard to financial planning decisions. Far too often lottery winners fall on hard times after winning due to issues that are both psychological and financial. According to Dr. Walt Woerheide, professor of investments at The American College of Financial Services in Bryn Mawr, Pa., “There is substantial evidence that a sudden windfall of wealth results in some recipients losing focus on the important things in life. Some athletes become destitute a few years after retiring from their sport. Some entertainers become addicts. This suggests the first step upon winning a large lottery would be to establish a network or process to help the winner remain grounded in reality. Contacting a financial planner to set up a realistic plan that provides protection for both the psychological and financial issues should be the first step for a winner.” Don’t get caught off-guard in the rush of excitement.
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If you are the lucky (or unlucky) person to win the Powerball this Wednesday or if you happen to stumble upon another sudden windfall of wealth, what should you do? The very first action to take is to secure your winning ticket. Place the ticket in a fireproof metal or bank safe deposit box until you are ready to turn it in, and take a picture of yourself with the ticket and the dated newspaper listing the winning numbers. This next piece of advice may be hard to follow but try to hold off on telling all your family and friends at first.
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