Why? According to ABC News, most lottery winners feel completely overwhelmed by their good fortune, and feel pressured to share the wealth with friends and family. They also don't know who to trust for financial advice. And they need it--Because within a few months or years, one-third of lottery winners declare bankruptcy.
So, if you're a lucky lotto winner, here's how to handle your windfall. These tips come from Lewis Schiff, author of The Armchair Millionaire: At first, don't do anything! Resist the urge to splurge on big-ticket items, and don't quit your day job. Just live your normal life, and wait until all the excitement dies down. Then, it's time to think about what to spend your money on. Here are the top 5:
- Pay off your credit cards.
- Set aside 6 months worth of expenses in an emergency fund.
- Make sure you have adequate insurance: medical, life, disability, and personal liability insurance.
- The 4th thing to spend your windfall on is--Your retirement. And make sure you get advice from both a professional investment counselor, and a tax advisor.
- And finally, you can start thinking about that dream house you always wanted to buy.