There are some important tidbits of advice that financial advisors give to Powerball winners regarding their Powerball prize.
Powerball winners get bombarded with advice and random suggestions about how to handle their winnings and the publicity of taking home a jackpot. And while your friend’s wife’s cousin might have the best intentions with doling out the nuggets of wisdom, there’s some advice that just won’t be helpful. The sound advice you actually need is from trusted professionals who know a thing or two about managing finances and investing. So, if you’re claiming a Powerball prize, these are the tips financial advisors suggest you follow.
You might be over the moon thrilled about your Powerball jackpot win, especially if it’s a sizable amount. But financial advisors say the first line of defense in protecting your new assets and yourself is remaining as low-key as possible. Not all states will allow complete anonymity when collecting a Powerball prize. So, you might have to contend with a little publicity depending on where you live. But take the necessary steps to avoid unwanted attention on social media, with local news inquiries, and even among friends and family. Too much attention can have people coming out of the woodwork asking for cash. And it can make you a target for scams and crime, as well.
Financial advisors will often say the first step Powerball winners should take involves assembling a team. This means, of course, consulting a financial advisor who can explain how to make the most of and preserve your prize winnings. But it also means talking with an accountant, your banking professional, and even a legal representative if you can establish a trust to claim your prize. Don’t go it alone if you don’t want to make costly mistakes with your winnings. And face it; you can afford to hire these professionals to help.
When you have expendable cash in your bank account, take the time to sit down and pay off high-interest debts. Paying off credit cards, auto loans, and getting caught up on utilities is a smart first step. Financial advisors might help coach you on how best to address larger debts, including home mortgages or student loans, which might be better served with a different payoff approach. But ideally, using your newfound wealth to clear the slate is a great plan.
Financial advisors are trained to help their clients plan financially for the long term. Your Powerball prize might have you feeling invincible with buying power. But finance professionals will always advise you to think ahead about paying your bills and affording your lifestyle over the next five, ten, or 20 years. There are countless horror stories of Powerball winners going broke within the first year because they didn’t plan and set spending limits for themselves.
It’s not uncommon for Powerball winners to feel compelled to help friends and family. Parents often pay off student loans for their grown children. Siblings pay off each other’s home mortgages. And the teenagers get new cars. But financial advisors warn winners to be careful when gifting or purchasing gifts for others. There are tax laws applicable to gifting that could result in stiff penalties if not properly documented. And the spending could get out of hand quickly if you become a magnet for ongoing handout requests.
If you’re a Powerball winner, congratulations! Consider these financial advisor tips about what to do first and connect with a local advisor to help guide you. In doing so, you’ll enjoy your winnings much longer and can have a smart investment advantage.