Winning a massive progressive slots jackpot or the lottery is a dream scenario for many gamblers. I’ve always avoided playing the lottery, and the main reason is that I don’t want the headache that comes with that much money.
I’ve seen people around me come into millions in the blink of an eye and swiftly blow the money on frivolous purchases and lavish gifts. They’re left with pennies and still forced to constantly be confronted by people looking for a handout.
I’ll pass; I enjoy my life just as it is today. I’ll leave the chasing riches to the rest of you.
In case you’re fortunate enough to hit a multi-million dollar payday, here are 10 ways jackpot and lottery winners blow their cash. Let it be a guide for how to protect your money should the unimaginable happen.
1 – Friends and Family
It’s hard for some people to tell friends and family “no” to anything. However, if you should come into a massive pile of cash, that’s precisely what you need to be prepared to do.
I’m not telling you that you need to be greedy and keep every dime for yourself. Still, your second cousin twice removed will need to figure out their own finances.
Your best play will be to remain totally anonymous. Many casinos and lotteries allow winners to stay in the shadows. This allows them time to get things in order and form an exit strategy depending on the amount of cash won.
Sometimes a simple and firm “no,” will be the best thing you can do for yourself.
2 – Letting it Ride
This pitfall applies more to the slot machine jackpot winner than it does to the lottery player. Still, it’s dangerous enough that all should take heed.
Slot machines are designed to slowly take your money over time. You may lose or win on any trip, but over a long enough stretch, the house always wins.
Now, if you hit a $15,000,000 MegaBucks jackpot, you’ll probably be able to weather the ebbs and flow just fine. Assuming that your gambling habits stay the same.
However, you’re now worth millions, and those dollar machines may not give you the same thrill they once offered. That can lead to trouble.
Keep a cautious eye on your gambling habits, and don’t let yourself get caught making bets that will compromise your massive winnings.
3 – The State and Federal Government Want Their Share
Many people don’t consider the substantial piece of the pie that you’ll owe to the federal government. Uncle Sam is going to take a smooth 25% or more off the top.
That will come with additional property taxes you’ll pay. You’ll also face a gift tax for anything you’re inclined to give friends and family over $15,000 in a year.
The brilliant winners will also hire an attorney, an accountant, and a financial planner to protect them and their assets. So, the bills will be piling up faster than you’ve probably considered.
4 – Philanthropic Good Will
As you’ve noticed, people will be coming out of the woodwork to get a piece of your money. This includes those of a philanthropic nature.
Charities do a ton of good for people in need; I’d never dispute that. However, you need to know exactly who and for what purposes your money will be spent.
Additionally, I hate to say that you can be too generous with your charity work. Still, you can give too much by putting yourself in a dire financial situation. The goal is to make your money last for the remainder of your life if possible.
So, there’s no shame in investing your money wisely and leaving a chunk for charity when you head for that big casino in the sky.
5 – Blowing Money on Depreciating Assets
One of the first things some of the nuevo rich do is begin buying flashy jewelry, lavish boats, and exotic sports cars.
These are depreciating assets that may quickly lose value. In other words, you’re throwing money away on such purchases.
Suppose you win a giant lottery prize worth over $200 million, then you may be in Ferrari territory. However, if you win $1 million and make a $250k purchase on a used car, you’re being reckless.
Focus on the purchases that will enhance your life long-term and hopefully appreciate in value. This means your home, other real estate, and investments.
6 – Forgetting the Value of a Dollar
It’s understandable how some winners of jackpots reaching over $25 million can quickly lose sight of the value of a dollar. They begin tossing money around indiscriminately, and boom, they find themselves in a tight spot.
When you have millions, ten thousand may not sound like more than a drop in a bucket. Still, it can quickly add up and even have a bit of a snowball effect.
Keep everything in perspective, and don’t trap yourself by being the big spender. Instead, tighten up your finances and stick to a strict budget.
You should be able to live an extremely comfortable life without money worries for a small percentage of your winnings.
7 – Being Seduced by the Casino
The casinos aren’t going to merely let you win millions or hundreds of thousands and become a stranger. Slot machine jackpot winners are expected to spend plenty of time giving the casino its money back.
They understand that the longer you are in the casino gambling, the more of their money they’ll retrieve. Don’t be surprised when they start steering you to the high-stakes VIP room.
8 – The Fine Print
The terms and conditions of many of the jackpots will affect what the actual payout may be. Many of the slots jackpots will pay an annuity rather than a lump sum.
In many lotteries, players have the option of choosing an annual payout or a lump sum.
The lump-sum payout is almost always the preferable option. However, if you’re worried about blowing your cash, the annuity can hand it out over 20-25 years.
This option ensures that you’ll have a steady income stream coming over the next two decades. Still, don’t fall for going into massive debt, believing the annuity payment will save you.
You’ll have to live on what you’re getting for the year and, hopefully, save most of the money that you’re being paid.
9 – Investment Opportunities That are Too Good to be True
Not every person approaching you with their hands out is looking to clothe the pigmy goats or feed the Amazonian trees. Some people asking for money will be more interested in telling you how they intend to grow your wealth through can’t miss investment opportunities.
When your former coworker approaches you about a can’t miss investment for an idea they’ve had, it’s essential to ask questions. The most important question being why nobody else has come on board and given them the required start-up money.
Perhaps a “Jump to Conclusion” board or a pet pencil eraser isn’t the hot investment they believe.
In addition to having someone qualified to make these decisions for you, it also saves you from playing the bad guy by telling them it’s a pass.
10 – Some People are Merely Bad with Money
Unfortunately, some people are terrible with money. They are incapable of setting a budget, and money seems to burn a hole in their pocket.
In these cases, it takes a stringent team of people around to keep their money safe. In some instances, no amount of coaching or outright pleading will be enough to save them from themself.
You see celebrities in the news headlines all the time that have lost millions through poor financial planning. I hate to see this for anyone, but it’s a sad reality of wealth.
Take notice of these 10 ways jackpot and lottery winners blow their cash. You may be the lucky winner one day, and my hope is that you’ll hold onto your wealth until your last breath.
Hiring the right professionals will help you provide for family and charity long after you’re done with the jackpot winnings.