You already know the big life is heading your way. How could it not be heading your way with all that new money? Still, the temptation to keep buying or accumulating endlessly can wipe you out in a short time.
If you go from living a simple life to instantly having the wherewithal to spend hundreds of thousands of dollars (or more) per week, what do you think happens to your expectations in life ahead? Chances are high that you will want more and more. Again, the cost of yachts, jets, private islands, mega-mansions, vintage cars, fine art and the rest of the luxury market can burn millions in a very short time.
If you start gambling in Las Vegas and are not happy until you are gambling with hundreds of thousands of dollars (or more) per play, you are dooming yourself. Now just wait until the real con men find you.
Taking you and your favorite 500 people on a luxury cruise around the world can become very expensive, very fast. Having an entourage generally only works for people who keep making more and more money — and they usually end up broke for that cost.
8. DO NOT THINK THAT BUDGETS ARE JUST FOR POOR PEOPLE AND FOR THE MIDDLE CLASS.
It may seem silly on the surface that you might need a budget and might need to consider limitations. The harsh reality is that creating and actually living on a budget are not just tasks for the poor and the middle class. The very wealthy, at least those who stay that way, know that even a vast sum of money can vaporize. Major lottery winners generally become wealthier in an instant than everyone they know combined.
This also goes back to having advisors and being prudent, but at the end of the day you do still have a finite sum of money. Chances are very high that you will make some serious purchases and your lifestyle will be changed forever.
Without setting limits for yourself and for what you do with others is a recipe for disaster. Again, many lottery winners go broke. If they went broke in a very short time, what do you think the reflection about wishing for a proper budget would be? In short: Do not think you don’t need a budget!
9. DO NOT BECOME THE BUSINESS BACKER FOR YOUR FRIENDS AND FAMILY.
Many lottery winners and newly rich become business backers for their friends and family. If you knew little about money or finance yesterday, what makes you think you will understand venture capital or merchant banking now? It may sound powerful and enticing. Do not dare fall into this trap.
One common theme that has come up with lottery winners who suddenly get vast sums of cash is that their friends and family start pitching them on endless business ideas. Sure, some will sound great and some will sound crazy. This could expose you to more than just a loss. You could end up with endless liabilities in some cases.
If someone has no knowledge of a particular business and does not know what it takes to actually run a business, will they do better because a lottery winner who lucked into vast wealth gave them money to start it? If your answer is yes, you seriously need to protect yourself (from yourself).
0. DO NOT THINK ABOUT GIVING YOUR NEW FORTUNE AWAY IMMEDIATELY.
Many lottery winners and others who become filthy rich fall into the trap of thinking that they need to immediately share their newfound wealth with society. It may seem nice to give away vast amounts of cash to charity or to religious institutions. This might not be the case for everyone, but giving away an entire fortune or a large part of it to a charity or to religious institution needs great consideration.
Imagine that you give away that fortunate and a serious crisis arises in your life or your family’s life. You simply gave away all financial means to change it. There are ways that you can be quite generous without doing the unthinkable. Rather than giving everything away now, the current charitable trend of the extremely wealthy is to plan for how to give the money away upon death. This allows you to divvy up what you want to give back to society and decide what you want to leave for heirs.
Should you be charitable? Absolutely! Should you give it all away? Absolutely not!
11. DO NOT GET ATHLETE OR CELEBRITY ENVY.
Many movie stars, entertainers and athletes live a life of luxury. Lottery money gives a winner the chance to live a life of luxury up with the lucky few. This privilege comes with pitfalls that can make them go broke. Keeping up with the Joneses is bad enough. Trying to keep up with celebrities is a recipe for disaster.
It may seem cool to own a 200-foot yacht, or perhaps to have an entourage or maybe a film crew following you around. It may seem cool owning castles in Europe. Owning an original Picasso painting sure sounds impressive. Having a big new private jet makes sense for a lot of people. Now go add up the price tags of these things, plus the cool cars and houses and the rest of it. You can go broke really quickly. Just ask actors and athletes who did this how they feel now.
Trying to dodge taxes might even sound appealing to misguided people. Before you do this, think about how many athletes and celebrities who have gone broke over tax dodging, and some even went to prison.