Take a deep breath and take stock of your options. You’re able to navigate this situation in a calm, orderly fashion. Just follow these steps.
It’s OK to celebrate your lucky day — just keep the news to yourself.
When people come into a small fortune, they often become overwhelmed by the attention they draw. Long-lost friends and acquaintances from decades ago have a knack for showing up right when you acquire a lot of money.
This is precisely the time when you don’t want to be the centre of attention. It might be smart to arrange professional help to keep from making unwise decisions.
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Here’s what to do now:
- Protect your ticket. If you have a lottery ticket, sign the back of it and hide it. It doesn’t officially belong to you until you’ve given it your autographed.
- Don’t tell anyone other than you partner. If you live in a state where lottery winners must be announced:
- Get off social media. With all the attention you’ll receive, you don’t want people invading your privacy by browsing through your photos or sending unsolicited messages.
- Be ready to go away for a while if necessary. Just as people will want to find you online, they’ll want to find you in person. It’s best to avoid any scrutiny while you arrange advice, and develop a strategy on how to manage your money.
If you win the lottery in the UK, a team of advisors will arrange a time to come and see you. The timing of the meeting is entirely up to the winner.
Some people prefer to visit one of the regional centres in Watford or Liverpool, but most appointments happen at the winner’s home.
The appointment will often take place on a Monday, because the money can only be paid out when the banks are open.
You also might choose to speak to a tax lawyer that specialises in such financial issues such as large windfalls. Don’t just contact your local lawyer. Instead, do some research resources and get in touch with some of the more reputable legal firms.
After you’ve collected your windfall and paid taxes on it (if tax applies), you can lay the foundation for a solid financial future. Here are a few wise things to do.
Get your money into your accounts
If you need to get your money back into a bank account internationally or send money to family overseas, compare international money transfer services that are best equipped to help you with a large transfer.
Work with your financial advisor to get your funds into your accounts before you start spending it.
Pay off debts
The longer you hold onto debt, the more interest you’ll accrue over the long run. Now is the perfect time to pay off everything you owe: credit cards, student loans, mortgages and more. It’s a responsible first step that will save you money over time.
Put money into a rainy-day fund
You might be surprised by how many lottery winners end up broke. Whether through poor spending habits or plain bad luck, it’s easy to squander a large windfall. So plan accordingly and create a backup fund.
A rainy-day fund is typically stocked with six months’ worth of your salary. Since you’ve just received a large sum of money, you may instead want to put a percentage of the windfall into an emergency fund. To find the right amount to save, speak with your financial adviser.
Consider waiting a while before doing anything else
Once you’ve accepted the money, paid off your debts and created an emergency fund, consider doing absolutely nothing. Your winnings aren’t going anywhere.
Many financial advisers recommend letting the excitement die down before taking any other actions.
For several months or even a year, consider living as you normally do. This will give you time to carefully plan out your next steps.
For example, work with your financial adviser to determine how much of your windfall you’ll give to family and friends. You may even consider hiring a psychologist to help you deal with the emotions that come with receiving a large sum of money.
Now that you’ve taken care of your short-term needs, your goal is to protect your windfall for the long term.
Create an investment strategy
Work with your financial adviser to assemble an investment strategy. This strategy should be consistent with your tolerance for risk.
To get your feet wet, you might first look at stable, low-risk, low-return investments – perhaps from conversation with your advisor. Depending on the size of your windfall, you may generate a sizeable income off of these “boring” investments alone.
After consulting with your financial adviser, you could expand your investment portfolio to include investments like stocks. Your financial adviser can help you create a portfolio with the right mix of stocks, bonds and other securities.
Start planning your estate
If all goes well, you’ll live the rest of your life without having to worry about money.
You’ll want your children and relatives to enjoy the same comfort, so begin the process of estate planning. In short, this means you’ll decide what happens to your assets when you pass away.
Work with your financial adviser, an estate planning attorney and a tax adviser to settle matters of your estate — preferably well in advance.