“What do they do with all that money?”
Odds are you’ve asked yourself that exact question before after learning about big-time lottery winners across the country.
$5.4 Million...
$31 Million...
$315 Million...
As astounding as these numbers are, they are all very real examples of lottery winners that struck proverbial gold. And unfortunately, they’re also all lottery winners that ended up filing for bankruptcy within years of winning.
Why does this happen? Let’s take a deeper look at how—and why—far too many lottery winners go from everything to nothing in a matter of years.
Ways to Come into Lump Sums of Money
Hitting the jackpot isn’t the only way to find yourself with a large sum of money in a short period of time. Other ways to come into money include:
Lawsuits
Inheritances
Casino Nights
Unexpected Loan Paybacks
Bonuses
While recipients of large windfalls from the lottery, lawsuits or inheritances are sometimes restricted to certain guidelines before receiving the money, the majority of those come without terms leaving the decisions up to the recipients’ own judgement. And in our experience, that’s usually never a plan for success.
The 3-5 Year Curse
According to CNBC lottery winners are more likely to go bankrupt within 3-5 years than the average American, “Studies found that instead of getting people out of financial trouble, winning the lottery got people into more trouble, since bankruptcy rates soared for lottery winners three to five years after winning.” With numbers such as the ones above it almost sounds impossible to do, doesn’t it? Yet time and again we hear about the downfall of a short-lived financial empire for people who hit it big.
Common Reasons Lottery Winners Lose It All
They Stop Working: All too often winners will quit the very day after winning their money—even before the check gets put in the mail. Not only is this counting your chickens before they hatch so to speak, it’s also not a sustainable model. Even millions of dollars can dissipate quickly and bringing home an income despite being a lottery winner sets you up for more success long-term.
They Give Too Much Away: Family, friends, friends of friends, the guy at the end of the street that lent you his edger one time—they all seem to come around more often after someone hits the lotto. And most times, the winner shares freely. Too freely.
Taxes Negate the Winnings: Depending on the state you’re from—and where you bought the ticket—you could end up paying anywhere from 2.9%-8.75% in withholdings. Oh, but did we mention that the IRS takes 24% off the bat? In short, the amount people “win” is never the amount they walk away with.
They Go Spend-Crazy: Boats? New Cars? A villa in the Maldives? The sky’s the limit, right? Unfortunately, not. Big ticket purchases add up quicker than expected—and money DOES run out.
So, what’s a potential solution?
A Smart Investment with Your Earnings
Before you call even your best friend to celebrate, the first call should go to your financial planner. Don’t have one? We believe the best investment you can make in planning for long-term wealth is to hire a gatekeeper to help preserve your money. Together a financial planner will help you to map out your financial goals so that you are able to enjoy both life and help preserve your, albeit large, nest egg.
Our suggestion? Diversification—and we’re not the only ones who agree. At Snow Financial Group we believe that the best way to create and keep wealth—no matter how you come into it—is to be smart with your money from the onset. If you’re ready to discover the ways to help preserve your windfall or life savings, contact us today at http://snowgroupllc.com/ to see what type of diversified strategy we can customize for you.
With Snow Financial on your side “here today, gone tomorrow” doesn’t have to be the story of your big-time winnings.