You’ve likely had that “If I had a million dollars” talk with your friends, family, and significant other. You’d buy a boat - no, a yacht! You’d buy a mansion - no, two mansions! You’d lease enough cars to line your street from one stop sign to the next, and you’d probably still have enough left over in the bank to retire tomorrow!
When Hamilton lottery winner Sharon Tirabassi won $10.5 million in 2004, she plowed through it in just nine years. She’d eaten through half of it by 2007. She had just three-quarters of a million dollars by the time she realized the spending needed to stop. She set up trust fund accounts for her children and started taking the bus.
The unlucky winners
Lottery winners declare bankruptcy at twice the national rate in the U.S., according to a study by the University of Kentucky and University of Pittsburgh. The National Endowment for Financial Education estimates that 70 percent of people who unexpectedly come into large sums of money will lose it within 7 years.
Pay attention to the spending patterns of many of these lucky winners and you might spot some unfortunate trends. Unsettlingly enough, too many of them might align with some of your own visions of grandeur.
Here are a few of the more common mistakes to avoid...
4 things NOT to do if you win the lottery
- Split up the winnings with family and friends
While this sounds like an obvious 'do', many lottery winners express regret over this decision. Most give the same explanation as Tirabassi: Friends they hadn’t heard from in years came out of the woodwork, cashed in, and were never heard from again. On the other end, the family members to whom they gave their winnings disputed with one another over who deserved what. Those who walked away with secondary winnings fell into the same lottery-winning trap of spending it all in a short amount of time. Instead, consider setting up funds in their name - and be selective with whose names you jot down.
- Go on a family destination vacation
It’s okay to treat yourself, but as you may recall from the trips you took back when you were a regular old peasant like the rest of us, money vanishes faster on vacation. Many lottery winners make a family vacation one of the first things they aim to cross off their wish list. UK lottery winner Luke Pittard won $1.9 million and spent a large chunk of it on a destination wedding and trip to the Canary Islands. He went back to working at McDonald's 18 months later - but was smart enough to set up investments with his remaining winnings that earned him more in interest payments than what he was making at the restaurant.
- Use your money to justify more debt
Virginia winner Suzanne Mullins decided to play it smart with her $4.2 million - or so she thought. She chose to take her winnings by means of yearly payments rather than a lump sum - and ended up using her future winnings as collateral for loans. In order to pay off a suddenly immense debt load, she asked for the lump sum payout, but never paid her lenders back. Today, she has no assets and her lenders have yet to collect their dues.
- Upgrade your lifestyle beyond what you really need
Sixteen-year-old Callie Rogers won a $3 million jackpot in the 2003, but insisted she would continue living frugally. It wasn’t long before she found herself with four grand homes, several new cars, and two receipts from the plastic surgeon’s office. By 2012, she’d blown through most of her winnings and picked up employment as a maid. “For the first time, I feel like I have everything I need,” she told The Mirror.
Making the pot last
Whether by means of a lottery win, an inheritance, or a pot of gold at the end of the rainbow, you should aim to make your unexpected jackpot last. Just do the exact opposite of everything discussed here and you really will be able to retire tomorrow (and stay that way...we hope).