We’ve all dreamed about winning the lottery and the grand things we’d do with our lives if we became instant millionaires.
But have you ever thought about what you’d do – practically speaking – if you won? We asked local personal finance experts and Boston.com contributors to tell us some of the advice they would give to their own clients in the event of a winning lottery ticket. Here are 10 tips they gave us.
1. Keep the ticket safe
The worst thing to happen to a recent lottery winner is to have that ticket go missing. If a winner falls into your hands, make sure it is kept somewhere secure until you can claim the money.
2. Don’t share the news
To keep something this big a secret is impossible. But Cheryl Costa of AFW Wealth Advisors in Natick suggests that you don’t share the news with a large number of people.This will help to ease the number of requests for money you’ll be bombarded with once the secret of your good fortune gets out.
3. Assemble a team
Handling all of that money in a proper manner can become overwhelming. Andrew Chan of Integrative Financial Advisors in Framingham recommends hiring a Certified Financial Planner and an estate planning attorney, among other professionals, to help you map out a long-term strategy for handling your money.
Dan Galli of Daniel J. Galli & Associates in Norwell adds that you should carefully interview each member of your team before hiring them, and advises against hiring experts (such as a financial planner, CPA, attorney, and asset manager) from the same firm.
4. Learn the business
In addition to having a financial team, Jamie Downey of Downey & Co. in Braintree recommends gaining some core financial knowledge for yourself. With this knowledge it becomes easier to weed out “professionals’’ or others that might want to scam you. He suggests the “Rich Dad Poor Dad’’ book series as a good starting point.
5. Take the lump sum
You can either claim the money all at once as a lump sum or as an annuity over 26 years. If you’re comfortable getting your money in smaller increments with a standard rate of return, then take the annuity. But both Downey and Galli recommend the lump sum payment in order to avoid potential changes in future tax rates that could effect the amount you receive over time. Downey also cites the benefits of having control of the money yourself right away, and the potential to get better overall return on investing the money than taking the annuity would afford.
6. Keep the money in a safe place until you have a plan
Once you claim your money, it’s vital to keep it safe. Because the sum is too large for it to be covered by FDIC insurance, Galli proposes that the money should be deposited to a brokerage account invested in US Treasuries – at least until more concrete investing decisions are made.
7. Set aside for what’s important
You want your newfound wealth to last you the rest of your life. Before splurging on luxury, you should work with your financial team to put money aside for retirement, future educational expenses, debt repayment and other costs to keep you financially sound.
8. No extreme life-decisions
It’s very tempting to quit your job following a big win, but Costa advocates against it. “Take some time to let the new money situation ‘sink in’ and really think about what you want to do,’’ she says. Wait a few months or even a year to come up with any definite, lifetime decisions.
9. It’s OK to splurge – a little
With your new life set, it wouldn’t hurt to take some time for yourself. Do not waste money on a new house or lavish products but instead splurge on smaller, more practical things “like a new car or a much dreamed of vacation,’’ according to Costa. In the end, you will have a better understanding of how to spend your money.
10. Stay in control of your winnings
Above all else, you must be in control. It’s true that you have a trustworthy team, but Galli suggests that you have final approval on any decisions and that you stay in the loop. They are your winnings, and it is ultimately up to you to figure out how to spend it.