Winning the lottery might seem like the answer to a lot of problems, but in reality, you get rid of some of the old problems by swapping up for a whole new set of them. Many people who come into sudden wealth, it seems like every dream they have is about to come true. They’re going to buy a mansion. They’re going to buy that top-of-the-line Mercedes-Benz. They are going to help their friends. They’re going to help their family.
And in the end, all too often, the one needing help is the winner.
For people who suddenly come into wealth, there is often a lot of pressure, but not a lot of know-how. Managing your finances takes a skill set that is called financial literacy. All too often, people either think that the money can never run out, or they trust people they really shouldn’t on how to best invest and use their sudden windfall. Other winners have problems with substance abuse, gambling, or other addictions. It’s entirely possible to win millions of dollars and end up 10 years later taking the bus to work or living on a stipend of $450 per month and food stamps. Unfortunately, some winners don’t just lose their money, some like Abraham Shakespeare they can lose their lives at the hands of so-called friends.
The stories that are linked above are only a few of the many stories of lottery winners who have run out of luck. A study at the University of Kentucky, University of Pittsburgh, and Vanderbilt University took a look at what happens when people suddenly come in two large amounts of money. They studied 35,000 winners from Florida’s Fantasy Five Lottery who had won up to $150,000. 1900 of those winners were bankrupt within five years, extrapolating that one percent of lottery players file bankruptcy within a given year.
Those numbers are not nearly the amount of the recent Powerball jackpot, but they are not far out of line with people who are receiving financial settlements from an insurance claim, lawsuit, or inheritance. It’s possible that receiving this kind of “free money” have a tendency to treat it differently than they would money that they earned. Then they look at the kinds of lifestyles promoted on television and in magazines, and decide that must be the way to live. Instead they need sound financial advice, that doesn’t come from people who have their hand out.
No matter how much your windfall is, you need sound legal and financial advice that will help you plan for the future. Whether it’s a hot ticket, inheritance, or settlement, you need to be able to make realistic plans and set achievable goals. You will also need to set up trust funds, prepare wills, and make sure that you are well protected from scammers and con artists – even sometimes from your own family.
If you have any questions about how to get out a debt or looking at bankruptcy options, feel free to contact our office and we can get you started on staying in control.
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