Yes, there is a lot of excitement and breathless coverage of the possibility that someone could win $370,000,000 in the lottery, though I read if you take the lump sum amount its only $114,000,000.
So what would you do with that money, or more realistically what would you do with a smaller sum that you inherited or won? Let’s say $500,000-$1,000,000.
Step 1: Do nothing! Just relax for awhile, there is no rush to invest or spend the money, just let things settle down and sink in.
Step 2: Figure out what’s really important to you. Yes a luxury car is nice, but I bet very few people on their death beds say I shoulda bought the Mercedes. Think more deeply about your values and life goals and how you could use that money to implement them.
Step 3: Turn your thoughts into goals. To be real most every goal needs the following things:
- Money (how much, when is it needed)
- Timeframe (when will this be completed, milestones)
Step 4: Discuss your goals with your spouse, partner, and family if you haven’t already and enroll them to support you.
Step 5: Have a discussion with an outsider that can give you a reality check. Your friendly Fee-Only NAPFA Registered Financial Advisor is a good place to start.
Your advisor can help you do a reality check on your goals and could point out things you may have missed. (Pay off your credit cards first!, Make sure you won’t run out of money and that your retirement years are adequately funded.)
Step 6: If there is any extra money after your basic needs and life-goals are fully funded, you then could spend some portion of the any extra amounts on short-term needs (cars, boats, toys, etc.) You may also want to consider expanding your original vision and use this extra amount to fund it. If you do decide to spend some of the extra strongly consider spreading the spending out over a few years. You will have more enjoyment from the things you buy that way.
I have to run now; I need to buy that lottery ticket!