Just Won the Lottery?: Ideas for Dealing with Your Windfall

I Won The Lottery, Now What? Each day millions of hopeful citizens nationwide line up to buy a lottery ticket for their chance to break from the routine of their daily lives. They always have great ideas that start with "If I won the lottery..." Whether it’s some random drawing of five to seven numbers like Mega Millions or Powerball, or a scratch ticket, most of us know the odds are not exactly in our favor. But every day, in every state in the country someone wins a lot of money -- more than they ever imagined. Is this you? Good for you! Are you asking: I Won the Lottery Now What? Here are some suggestions.


First step is to sign your ticket, if you haven’t already, and keep it in a safe place. It is basically a bearer instrument, so keep it in your possesion. Get your proper IDs together and plan your lottery visit. Assuming won-the-lottery-now-what-mega-millions-powerballit is a grand prize you will have to go to your state’s lottery headquarters to claim your prize. You don’t have to rent a limousine to go, but if you are very distracted by the windfall then let someone else drive for safety.

Many large state and multi-state lottery prizes are paid out as an annuity over time (often 20 to 26 years), or as one large lump sum. Think about this decision carefully. Many winners choose the annuity payments so that a prize over a million dollars is spread out for many years, and they will have less chance of spending or losing it all. If you know that you might not be able to control yourself and/or others with access to this large sum of money, choose the payment plan to protect yourself and your loved ones. [Remember many lottery winners tragically find a way to spend, lose, give away, or waste all their windfall money within a couple of years, and then spend decades regretting it.]

Other lottery winners who have had more experience handling large sums of money, more financial 'maturity', or very clear goals and projects, opt for the lump sum payout. They assume that under their own control they will have more ability to grow and preserve their money and assets. The cash payout amount is often reduced by choosing the lump sum option.

When you claim your prize, plan on the lottery commission withholding state and federal taxes of about 30 to 35 percent or more, based on where you live. (You might still owe an additional amount on tax day!)


As a lottery winner, there’s no hurry to immediately change everything in your life. Breathe. Realize that a windfall of money can be such a blessing if handled correctly. This can be a blessing to you, your family, your children and grandchildren, not to mention your place of worship, your favorite charities, and your community at large. You are not obligated to tell everyone you know-- although  the press and lottery publicity may make that impossible. You don’t have to immediately quit your job. Some people park all or most of their winnings somewhere super safe and conservative for six months or more while they attempt to calm down and learn all they can about how to handle it. Don’t feel the need to make immediate promises/gifts to friends, family and acquaintances. Understand that they will need to adjust their expectations as well, and might not know how to handle their position in your windfall. (*See the postscript below) Just breathe. Perhaps spend a little money now if it helps you calm down. Enjoy yourself... but remember there is no rush! You just won the lottery...


You want to understand what is happening to your life and your new financial reality, but you will need help. If you don’t know the difference between a stock, a treasury bill, or a mutual fund, you need some professional help. Even if you do understand these concepts, you don’t want to make expensive mistakes that are hard to fix. In the short run, you will probably need tax help from an accountant or CPA, a separate investment advisor, and an attorney. Find professionals who will work carefully, who inspire your trust, and who are willing to patiently explain everything that you don’t understand. It helps to ask about their track record with other wealthy clients. You don’t want to be their first! 

Read a few books about money and finance so that you can handle your new situation. Imagine that managing and controlling your new finances, with help from professionals, is your new job, and this big windfall is your paycheck. 


This is a rare opportunity to “change your family tree” in the words of debt-guru Dave Ramsey. You will likely enjoy this more if you handle it well. Will you have fun? Of course. Should you quit your job? Maybe you will. What will you do with your time? You want it to be more than just spending your new found riches. You might even decide to go back to school just to better yourself! No student loans for you!

Keep this in mind: Even windfall money should be divided into simple budget categories of spending, saving/investing, and charitable giving. Your great grandchildren will thank you!



"Friends, Fast Friends, and Loved Ones" - The Change of Wealth

There are many stories about friendships, families --and even marriages -- being torn apart by the stress related to the windfall of sudden wealth. Every one is now your best friend. Your acquaintances suddenly become closer confidants. These awkward reactions are strange and bothersome effects, but can thought of as not just moments of greed, but as the "euphoria of money!" Even your close and extended family lunges and recoils in ways that lets everyone know that you are, and have always been, the "favorite" relative. The pressure can be so high that many lottery winners consider the winnings to be a curse on their happiness. Remember, you can always go back to living paycheck to paycheck. Make wise moves with your lucky windfall and keep your financial freedom AND your sanity. If you find yourself in a difficult emotional position with loved ones over the funds, then consider locking them away for a year (or three or five) in a safe place like certificates of deposits (placed at several institutions if you exceed the FDIC protections at your bank), or in treasury bonds. While this might not be the same counsel you would get from a financial planner, it may give you, and your loved ones, the time to grow and mature into your new financial life. It's also possible to create a trust, foundation, or other entity to help you control the overall movement of the resources, and to oversee the giving. BEST OF LUCK!