6 Smart Money Moves For Lotto Jackpot Winners
It’s been more than a week since the lucky pair of bettors claimed their respective share of the unprecedented P1.18-billion lotto jackpot. I bet right now there are still a number of bettors who are still day dreaming of being the lucky winners. Can you blame them? I can’t. Having that sudden vast windfall at your disposal will definitely alter the course of your life and your family.
The question is, do you have what it takes to smartly manage your new found wealth? Or will you fall deep financially like the sad stories we hear from previous winners?
One thing is for sure — money is not infinite! You can lose it just as fast as you have gained it regardless of the amount.
Here are some smart money moves every jackpot winners should take:
1) Breathe and relax
The first step to make doesn’t involve money management skills but it’s about keeping your emotions intact. Just breathe and relax, let the happy hormones die down a little bit. A clear mind is a great ally during this exciting time. The more emotional you are the less control you have and that’s where reckless decision-making starts.
One common story we hear from most lotto winners is that they are in constant survival mode prior to hitting the jackpot, struggling to provide financially for their families. Saving money is out of reach let alone investing.
The norm is having a couple of hundreds or thousands in their possession just enough to spend for their needs. So when they receive a sudden inflow of millions, panic and restlessness set in, making them to unintentionally return to their old money habit of spending everything in possession.
If you want your good fortune to serve you well during your lifetime and your next generation, weed out your old money habits and teach yourself to be comfortable with your new found wealth by being in control of your money and not the other way around.
2) Don’t play Santa Claus
While giving brings an enormous joy to the heart, I say proceed with caution. It is easy to get tricked by the size of your new found wealth, thinking it will never run out. Showering your family, friends, neighbors, relatives up to the 10th degree with material things will lead to your bankruptcy. So think twice. Again, money is not infinite! Sharing is good but don’t let people treat you like a breathing ATM. Learning to say “No” is an effective defense against unscrupulous people trying to take advantage of you.
3) List down, prioritize wants
Now that you are calm and relax, begin listing down all the things you want to do with your wealth and prioritize them according to what matters to you most. Giving in to all your spending desires all at the same time is a guaranteed way towards financial disaster. Deal with things that need your immediate attention such as paying off any outstanding debt, securing your children’s education needs, etc. before indulging yourself to splurging for your wants. Having a list will help you plan how to move your money accordingly.
4) Assemble your financial team
Do-It-Yourself or DIY might be a great idea if you’re fixing a leaking faucet in your home. But in managing your new found wealth, calling the right people for help is the smart thing to do. With that huge amount of money suddenly on your lap, you will start to live in an unchartered territory where you can easily get lost. Get help from people who are competent in their fields to help you navigate through your new environment. You might need an accountant to help you with your taxes, a lawyer to help you with your estate planning, and a registered financial planner to help you piece together a financial plan and help you grow your money. Sure you will have to pay them for their services but having these professionals around you is all worth it if they can help you avoid making costly financial blunders.
5) Let your money work for you
Now that your wealth has been created, it’s now time to enhance and preserve it. Instead of spending most of your money on lavish splurging, focus on spending it on assets. Buy assets that will provide additional stream of income for you. Income you can then use to spend on things that you desire.
Three assets that you can use to create additional income stream:
Business – Start developing your entrepreneurial sense. Having a business is a great way to compound your wealth. Start by assessing your skills and competencies. It is easier to build a business aligned with your expertise.
Hire the right people to help you and continually educate and immerse yourself in your chosen field.
Real estate – Real estate investments are great investment tools that can provide you with steady cash flow through rental income.
Paper assets – Stocks and bonds are examples of paper assets. These are investment vehicles that will generate earnings for you without having direct participation in the operations of the business where you are invested in.
Financial planning is not solely devoted on preparing for your future but also in making sure that your today is also being taken care of. Treat yourself and your family regularly. Have an “Indulgence Fund” set up every month for your wants. The most prudent way to set this up is to allocate a specific percentage of your investment income towards this fund, say five or ten 10 percent depending on the lifestyle you’d like to create. In this way, you get to enjoy the fruits of your investments without putting too much dent on your financial resources.
With proper planning and the right money mindset, you won’t need luck to have your new found wealth to take care of you and your family. It will provide the kind of lifestyle you’d like to live and free from financial stress for the rest of your lives.
Jesi Bondoc is a Registered Financial Planner of RFP Philippines. He is the Director of My Wealth MD and Partners, Inc. specializing in investment advisory. You can send your money questions at firstname.lastname@example.org and they’ll be answered on his next article. For more info about Registered Financial Planner program, e-mail to email@example.com or text <name><e-mail> <RFP> at 0917-9689774.
701 total views, 1 views today