If you discover yourself holding a winning Powerball ticket, learn from the missteps of others and avoid these big Powerball mistakes.
If you’re like most Powerball players, you sometimes let your mind wander, dreaming of all the bills you could pay and fun “stuff” you could buy should you win. But when those numbers line up in your favor in reality, you’re going to have some big decisions to make. While you’re daydreaming of Powerball jackpot life, be mindful of the mistakes others have made before you. Avoiding these Powerball mistakes can help you make the most of every Powerball prize dollar should you become a winner.
Not Choosing the Right Payout for Your Situation
Don’t assume how you’ll take possession of your Powerball jackpot without first consulting a financial advisor. While it’s common for winners to choose the lump sum payout, it doesn’t mean there aren’t benefits to structuring the annuity. Accepting 30 years of payments could keep you from overspending, making your prize last longer. So, careful consideration is important before deciding how you’ll take your cash.
Overestimating Your Wealth
If you were to win $100 or $1,000, you’d know precisely what those financial limits include. You could realistically understand how much you’d have to spend or save. However, when you come into $1M or $100M, it’s harder to comprehend where that money “ends.” And it’s not uncommon for Powerball jackpot winners to overestimate their wealth, not realizing just how quickly it can all run out.
Subscribing to the Monopoly Money Effect
For some Powerball winners, the prize amount is so life-altering that it doesn’t seem real. And when it’s not “real” to you, you end up spending more freely, without pause. Financial professionals call this the Monopoly-money mindset. And it’s responsible for the downward spending spiral you read about with other jackpot winners. When people lose sight of their money limits and spend without boundaries, they burn through their prizes quickly, sometimes resulting in bankruptcy.
Becoming a Victim of Lifestyle Creep
We’re a society of consumption. And if you win millions in a Powerball drawing, there are a lot of lifestyle extras suddenly within your affordability grasp. But finance experts warn those who come into large sums of money to recognize the long-term cost of today’s spending. Buying that massive luxury mansion may be affordable today. However, the annual property taxes could erode your prize money fast, eventually becoming unaffordable. Don’t be blinded by your cash so that you ignore the lifestyle creep costs later.
Making Emotional Decisions with Your Money
Another big mistake that Powerball winners make involves emotional spending. Wanting to pay off a family member’s home, donating to your favorite charity, buying a restaurant, and driving off the lot in a Ferrari are all well within your spending rights. However, allowing your emotions to dictate when and where you spend your money could be costly. Consult a professional who doesn’t have an emotional stake in your wealth. Get realistic financial advice to outline the benefits and consequences of every spending decision.
Going Too Public with Your Status
As exciting as it would be to become a Powerball jackpot winner, don’t over-publicize yourself. Staying as anonymous as possible can work in your favor. But sharing your newfound wealth publicly, on social media, or carrying around large sums of cash could put a target on your back to would-be criminals. Lottery-related scams are on the rise, and identity theft can be extremely damaging. Plus, flashing physical cash all the time could result in physical harm from those looking for a quick theft opportunity.
The bottom line is this - don’t presume you can know or best handle managing a Powerball jackpot windfall without help. Consult with a successful wealth management professional or financial advisor to lay out a plan that works for you. So, keep daydreaming about those big wins. Just make sure you’re getting the assistance you need should you become a Powerball jackpot winner.