Financial Literacy

What to Do after Winning the Lottery? 3 Top Tips for Windfall Money

I think everyone has fantasized about winning the lottery. So much of our lives are spent working towards specific financial goals. Everyone wants to pay off debt, buy their dream house, and spend every summer on a tropical beach and every winter on a mountain. Some people want a wardrobe where they can wear different clothes every day of the month, and others want to spend their life on a boat or the beach.

The lottery is one way that we can fast track all of those plans in order to make our dreams come true immediately. Of course, from a financial perspective, the lottery is a poor financial decision.

What to Do after Winning the Lottery? 3 Top Tips for Windfall MoneyChances are, even if you play the lottery every week for the rest of your life, you will never win. Likewise, going to the casino can invoke dreams of massive winnings, but rarely will you leave with more money in your pocket than when you arrived.

That being said, life has its ups and downs. If you bought a winning lottery ticket, or even got lucky at the casino, or if some other massive windfall money comes into your ownership, you should have a plan for how to deal with that money. So here’s three things everyone should do if they come into ownership of a large amount of money.

Don’t Tell Anyone

As tempting as it may be to tell your boss off, take your buddies to the Superbowl, or pay off your parent’s massive mortgage, don’t tell anyone that you won the money. Some areas you’ll have no choice but to declare publicly your winnings, so do what you can to quietly prepare for the incoming money before you claim it. There’s a couple reasons for this.

First and foremost, announcing to the world that you suddenly have a lot of money will bring out every single person you ever met. Forget about ever using Facebook again, you’ll have dozens of messages daily from people you hardly remember wondering what you’re doing with all that cash. I’m sure a bunch of them will be championing noble causes, but just as many will be looking for a quick buck.

The second main reason you don’t want to tell anyone is because people will start to treat you differently. If people are suddenly nice to you, you’ll wonder what ulterior motive they may have. If they are suddenly mean, you’ll think that they’re resenting you. This will ruin your life, your friendships, and your work relationship.

If you want to have some peace and quiet to enjoy your new found wealth, don’t tell anyone. Keep going to work, even if you plan on quitting or moving, don’t make any massive purchases, and take that time to really plan out how you’re going to use the cash.

Hire Someone

The vast majority of lottery winners are bankrupt within a couple of years. If you aren’t 100% sure how you’re going to use, spend, and save that influx of cash, hire someone to figure it out for you.

It’s normal and natural to want to take advantage of that cash by going on a trip, paying off the mortgage or other debt, or hiding all that cash under your mattress. These may not be the best ways to take advantage of that income, so ask someone who knows best.

Most likely they will want the entire amount to invest for the future – and that may be the best option. Even if you can get a 3% return on a million dollar investment, you can massively supplement your annual income without any additional work. It’s not quite as glamourous, but it could be the best option. Ask someone who can break down all your financial options and collectively determine what is best.

A second good hire would be a lawyer who will assist you in protecting your assets. Consider it an investment for the money itself. Once you have something worth taking, a year old minor car accident could suddenly become much more serious before you had any assets.

Reward Yourself

Take 5% of the income and treat yourself, just wait 3 months first to decide what to spend it on. Like I said, it is going to be awfully tempting to use that money on all sorts of things, and you can help battle that feeling by rewarding yourself with a small amount. Take 5% of the cash, put it into your personal banking or chequing account, and spend 3 months figuring out how you’re going to spend it.

You can plan the ultimate trip to Europe, you can spend it all at the mall, it doesn’t really matter. 3 months is long enough that people won’t associate it with any significant event (death of a relative, lottery, that casino trip) so you’re still not breaking rule #1 by spending some cash, and 5% is small enough that it wouldn’t be unreasonable to say that you’ve saved it.

If you wait 3 months, it’ll be even easier to say that you have, in fact, “saved” that money up. Failing to reward yourself can lead to negative behavior. 3 months can seem like a long time, but it is short enough that most people should be able to hold on that long in order to make the most of the situation.

If you have come into a lot of money suddenly, how have you dealt with it?


  1. Jane Savers @ Solving The Money Puzzle

    I don’t want to win really big. I know a woman who won $500,000. It changed her life for the better but she is still a normal person. Last week’s Powerball winners will lose friends and family because of the win. Money makes people crazy.

  2. Michelle

    I agree with Jane. I would want to win something smaller than $600 million. Big winners always seem to have a bad future.

  3. krantcents

    Every time, I have had large sums of money, I invested it for the future. If I won the lottery, I would have a meeting with my attorney and CPA to discuss a strategy to deal witht the press and investment strategy. These are two advoisors I have known for 25-30 years.

  4. Bryan Jaskolka

    No, I woulnd’t want to win a large sum of money either. LOL What a joke! People I’m sorry, you would LOVE to have that amount of money! And if you’re worrying about it changing you, well don’t worry. If you’re worried about, the chances are that it won’t happen.

    What I actually REALLY wanted to say though was, even before you put that little bit aside for yourself, PAY OFF YOUR DEBT!! The chances are that you’re going to get even more into debt once you have more money to spend (yes, that’s just the way it works) so best to start off with a clean slate. And if you only win enough to pay off those debts? Then you’re still way farther ahead than you would’ve been otherwise.

    I love the don’t telling people advice, too. That should be tied for number one with the debt thing.

  5. John Anderson

    Winning the lottery say $2 or $3 million is good anytime but now with long term interest rates low it’s not the best time to win.A $2,000,000 winner may get at most 3.50% to 3.60% from long term provincial bonds which would spinoff $70,000 to $72,000 a year not bad.

    In 2009,it would of generated $105,000 a year,in 2011 $90,000 a year so there is a big difference.It sounds ironic that you have to be lucky to win the lottery and lucky when you win the lottery.

  6. Anton Ivanov

    It’s definitely a good idea to consult somebody who can help you better invest your money if you don’t have enough knowledge. The key is to find trustworthy people who are not just trying to get a piece of your prize.

  7. Joseph Bruyere

    I have already figured it out. I would move to a country where
    I can legally start an offshore group of companies.Start several small trust funds for the lucky few that are on my list.Become a resident of this country.Buy a small house there
    and live a simple life.The no taxation in some of these countries is quite nice to have.The companies would own everything, pay for all expenses and give me a small allowance per week or month.I would not come back to mother country for a few years,that so people will come to forget about me.I would do it all legal. I know people who are doing it right now and believe me,it can be done. Many happy returns.

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