Hey blog peeps!! I am leaving Grenada on Thursday!! For good! Ahhh! So, while I pack up my life, shed a few tears, and settle some things at work, I hope you enjoy two awesome guest posts this week.
Take it away, Sean!
It seems like over the past couple of years we have witnessed some huge lottery jackpots. For most, if not all of those winners, it’s a life changer. It also means a lot of added responsibility when it comes to their finances.
I don’t know about you, but I have days that I dream about winning the lottery. I suppose I should start playing if I want that to come true. The key for myself or any other winner would be to understand what it takes to handle that kind of money and not to blow it.
I am a pretty down to earth person who doesn’t try and live a flashy lifestyle. I know that my understanding of money would allow me to keep that same mindset, were I to ever win. Yes, I’d pay off my mortgage and likely do the same for family members. I would treat my wife and daughter to the vacation of their dreams, and then I would invest the rest of my winnings for the future. I would still be the same guy that tries to save a dollar on a Redbox rental by using one of their codes and I’d still be the guy who isn’t afraid to use coupons when shopping for groceries.
The problem is that a lot of past lottery winners are not sure how to handle this financial windfall that has fallen in their lap. I can understand how someone might want to use their winning on a $2 Million gold and jeweled Monopoly board or a diamond encrusted steak knife for $15,000, but there is a good chance you’re going to end up broke.
If you happen to be lucky enough to win the lottery or receive an inheritance, here are a couple of important things you need to consider.
Assess Your Situation
Now that you have come into a little money, the first thing you need to do is sit back and assess what needs to be done. Start by asking yourself a few basic questions. Do you have any outstanding debt? Do you have money put away in a savings account for an emergency?
These are the first things you need to make sure you take care of and make a priority. You need to use the money to pay off all current debts. These debts could be from a credit card, car loan or mortgages that your family has accumulated. Next you need to make sure you have a good amount of cash that is readily available in case of an emergency.
Invest, Invest, Invest
After all of your debts have been paid off, you need to look into investing a good chunk of the money. This will help set you and your family up for the future. What most lottery winners might not understand is that the interest that they can earn off of their winnings is probably going to be more than their salary ever was.
Even if you invest the money into low risk investments, you are still giving yourself a nice amount of passive income each year.
Now that you have paid off your debts, you’ve done a little investing; it’s time to do something fun. Splurge and go on your dream vacation, upgrade your home or do anything else that will make you happy. Just try and be as practical as possible. You don’t NEED a diamond encrusted steak knife do you?
For a lot of people winning the lottery can be the happiest time of your life. However, that happiness can quickly fade away if you don’t manage this financial windfall properly.
Editor’s Note: Great post, Sean! I once wrote about what I’d do if I won a million dollars. You can check it out here.
What would you do if you won the big bucks?