11 Things to Do When You Win the Lottery

Winning massive lottery money might sound like not having to work anymore. While that could be the case in ideal scenarios, things usually do not go down that path – at least, the past has different stories to tell. Knowing what to do with lottery money is critical if you want the money to add real value to your life.

Right after winning the lottery, sign the rear of your lottery ticket so that the ticket becomes yours officially. Take some time and money management lessons before claiming your prize. Most importantly, do not splurge, particularly when you have financial obligations to meet.

Keep reading to learn what you must do to win the lottery and keep as much of the money won for as long as possible.

11 Things You Must Do After Winning the Lottery

Stories of lottery winners ending up unhappy and broke after a year or two from the date of winning the lottery are not uncommon. If you’ve recently won the lottery and don’t want to be a part of that sad statistic, strictly adhere to the following tips.

Sign the Back of the Ticket

Sign the Back of the Ticket

If you’ve won a lottery and are yet to draw the money, the first thing you must do is sign on the rear of the ticket. Losing lottery tickets is not uncommon. If you happen to lose your unsigned winning ticket and someone else finds that lost ticket, they could claim the prize with just a photo ID to show.

If you are in no hurry to cash out the prize and would like to consider your options, make efforts to protect the ticket. Here are a few things you could do:

  • Make paper copies of the ticket
  • Create and store digital copies
  • Buy a home safe to keep the ticket secure
  • Store the ticket in the safe deposit box of a bank

Also, do not let anyone know about the lottery win if you are yet to receive the money. Though signing the ticket ensures no one else can claim the ticket, some people might tamper with the ticket so that you cannot claim the money.

Stay Anonymous and Take Your Time

Stay Anonymous and Take Your Time

If the rules in your state allow you to remain anonymous after a huge lottery win, take advantage of that. Once people come to know of your sudden prosperity, a deluge of financial assistance requests would be headed your way. Right from distant relatives and long-lost friends to charities and state authorities, everyone would want you to pay heed to their financial woes.

Rules about publicizing a lottery winner vary across states. Not all states in the U.S. allow lottery winners to remain anonymous. In New York, lottery winners’ names are public records. In South Carolina, however, remaining anonymous is possible. In some other states, it could be feasible to stay unidentified if you set up a limited liability company or trust to receive the prize. An attorney can then claim the winnings on your trust or firm’s behalf.

Depending on the state you purchased the ticket in, you have a time of three months or up to a year from the date of the draw to claim your prize. Therefore, learn more about the rules of a state applicable to you and create an action plan accordingly.

If there is no anonymity for a lottery winner in your state or the state you purchased the ticket in, do not immediately contact the lottery authorities after the winning lottery ticket number has been announced. Take your time, or let a few days or weeks pass so that all the media craze surrounding the big winner (which is you) reduces to a sputter. Also, use this breathing space to plan how you’ll spend the lottery money.

Unlist Yourself

Unlist Yourself

Once the world around you comes to know that you won a million-dollar lottery, more people would want to be your friend, and you’ll suddenly get swamped with phone calls from everywhere. Friends, work acquaintances, charities, investment advisors, etc. who never bothered would reach out. If you are not good at managing money and all this unwarranted attention, you could end up with nothing in a year or two – even if you won in the millions.

However, there are a few ways you could win a lottery and still keep your peace and the money. Before claiming the prize, change your mobile phone number to something new, unlisted. Do not share that number with anyone except your immediate family and people who you could confide in. Also, get a PO box for your incoming mails. These measures will make it difficult for people to locate you.

Hire Finance and Legal Professionals

The people who should know about your lottery win are not your parents, spouse, or children. Although you should let your family and friends know about your fortune at some point, the people who should know about your win first are an estate attorney and a financial advisor.

As a lottery winner, you can either claim the total prize money as a lump sum or opt for an annuity arrangement. If you go the yearly payment route, you’ll be paid for 30 years. The first installment would be immediate. The remaining payments would be staggered for 29 years. To see the exact figures check out our annuity payout calculator.

See a tax professional before choosing as the tax scenarios vary between the two options. With a one-time payment, you must pay tax on your winnings immediately. With an annuity set up, however, you get taxed only upon receiving the payments each year. With a tax expert to take care of all the necessary math, you are extremely likely to choose a path that suits your financial situation and requirements better. We’ve created a lottery tax calculator to help you out with that.

Acquiring a huge amount of money through a lottery can heighten your stress and anxiety levels, which could result in bad decision-making. By seeking financial planning advice from trained professionals, you would be able to offload a major responsibility.

To help you assess your situation and look into the various financial aspects, you can even assemble a group of financial and legal advisers. Start by identifying a lawyer, accountant, and financial adviser for the job. It’s recommended the three work in tandem or the same physical space as that would make it easier to devise strategies.

Do not let others put together the team for you, even if someone volunteers since there could be ulterior motives. Do it yourself. Handpick your own accountant, investment advisor, and lawyer. Choose your team members after carefully vetting. For instance, check whether the insurance agents and attorneys have complaints filed against them with any disciplinary authority.

Also, do not feel obliged to keep the original team. If you’re not happy with the performance of a team member or two, go ahead and replace them. Remember, you have the time and also the money to do so.

Pay Off Your Debts

Pay Off Your Debts

Before you buy things for yourself and your family, pay off your debts – whether that is a mortgage, student loan, auto loans, or credit card debt. Pay off debts with the highest interest rates first if you plan not to clear all your debts and devise alternate plans instead.

If you were thinking about investing the lottery money and paying your debts off using the returns on those investments, you should know that the yields on even relatively secure investments such as Treasurys (not Treasuries) and CDs (certificate of deposits) are abysmal.

When you pay off a dollar you owe, that is a dollar you don’t owe any longer. If you invest that dollar instead of using it for debt payment, you cannot be sure whether the investment would multiply or shrink.

This is also the right time to look into your estate plan. If you’ve never planned for estate tax, this would perhaps be the most convenient time.

Create an Emergency Fund

Create an Emergency Fund

Financial woes could strike anyone, anytime. Even millionaires cannot afford to guarantee themselves lifetime financial security. A global financial crisis or pandemic could render millions of people jobless, cause incomes to fall, etc.

Therefore, set up a fairly healthy-sized fund keeping such emergencies in sight. As a general thumb rule, set aside funds that should be good enough to manage at least six months of your expenses.

Setting up an emergency fund is as easy as stowing the money in a secondary bank account that you don’t have easy access to or will not seek until an emergency shows up. Make sure you don’t carry any debit card linked to the account so that you cannot use that funds with a simple swipe every time you feel tempted to.

Invest Your Money Wisely

Invest Your Money Wisely

After paying off your debts or if you’re already debt-free, you can buy things for yourself. But if you’d like to exhibit more financial prudence, invest the money. It’s recommended you put the money in short-term, safe investments and do not touch them for the next six months. Put your money in diverse investment vehicles so that you have a diverse portfolio. In the financial industry jargon, it’s called “putting your eggs in different baskets.”

Invest your money equally between fixed-income investments and equities such as bonds and stocks. Different investment options include:

  • Purchasing a property in a burgeoning location
  • Investing in mutual funds
  • Setting up an education savings account/plan
  • You can also invest in yourself by heading to school again.

Do not put your money in any investment vehicle that you do not understand or are not familiar with. And if a particular investment tool’s returns sound a bit too good, steer clear of it.

Set Aside Money for Retirement

Set Aside Money for Retirement

Do not spend all the money investing and buying things. Keep some money for the future. Stash away at least 50% of the money that’s left after all the debts, investments, and purchases are taken care of. If your winnings permit, set up a secondary, retirement-focused investment account. You can also allocate a portion of the lottery money to your retirement accounts, such as an IRA (individual retirement account).

Thanks to the “personal pension” you create by adding up all your basic expenses, you guarantee yourself a cover that takes care of all your basic requirements even if the future doesn’t pan out as you thought. The risks attached to retirement will be neutralized if you save more for the future.

Donate Money

Perhaps, there is nothing more rewarding than giving money to people who need it more than you do. The satisfaction and feeling of fulfillment you get from helping out other people can never be accomplished by buying the swankiest house in an upscale neighborhood or hoarding all the latest gizmos. Therefore, donate money.

Make sure you give away money to the right people. As mentioned earlier, your friends, family, colleagues, neighbors, charities, and even strangers would want a portion of your fortune as soon as your win spreads. Most would request money; some may demand it, arguing they would part with the money if they were in your place. All of this manipulation and guilt trips would begin much quicker than you may have imagined.

To ensure you are giving away money to those who need it, look out for people in need instead of helping out people who come to you for money. Hand out checks to friends and family and be the reason for a transformation in their lives. If you are not sure they would spend the money the way you want them to, pay off their debts yourself instead of checking handovers.

Donating money to a charity, church, or family member going through financially tough times is a recommended path. When you donate to a registered charity, you can deduct that donation amount on your taxes.

Do Some Shopping

Do Some Shopping

If there are things you always wanted to buy, now is the time to realize those purchase dreams. However, do not go overboard or buy things you do not need. Or do not buy items because you have the money. For instance, it’s okay to buy a car if you don’t already have one, or the existing vehicle is too old or in an almost dilapidated state. But do not splurge on a luxury or sports car just because you can.

Buy a vehicle thinking you are buying with your savings and not lottery money. Most importantly, the vehicle or any other lifestyle purchases you make should complement your way of living. You don’t want to buy a car that’s worth more than the house you live in. That would not just be an unwise purchase, but you would also look pretty stupid and amateurish.

After you’re done buying some big-ticket items, indulge in retail shopping too if you’re into it. Retail shopping can be relaxing and exciting at the same time. But if you go overboard or get carried away with the emotion, you could end up regretting a lot of your purchases later.

If you believe shopping can be too tempting an experience to keep a tab on things, take a friend or family member with you. Make sure your companion is someone who can openly criticize your shopping decisions or tell you on your face that you don’t need a particular product.

Treat Yourself to a Vacation

Treat Yourself to a Vacation

After you’re done with all the stress and work related to straightening your finances and dodging all money-grubbers, it’s time to relax. Choose a vacation destination that you always wanted to visit. Book a first-class plane ticket (since you can afford to), switch off your phone, and chill out. Make sure you completely cut out routine life during the holiday since those would come back when you return.

If you don’t have any favorite destination but would not mind ideas, watch this video:

Claiming Your Prize

As aforementioned, you could receive your lottery prize money as an annuity or a lump sum. Let’s take a look at the two payment choices in a bit more detail.

Lump-Sum Payment

Lump-Sum Payment

When taking a lump-sum payment, you will not bag the entire lottery money. A fairly substantial amount will get deducted from your winnings as taxes. There could be a few other withholdings too before taxes. You get what’s left after all those deductions. When compared to the annuity or yearly payment method, the tax component is greater with a lump-sum. However, this doesn’t imply lump-sum payments are never ideal.

There are a few positives attached to this payment mode, which include:

  • You get all the money at once.
  • The prize money is taxed at existing tax rates. This could be a positive thing if the tax rates go up in the future.
  • If you invest the winnings wisely, you could extract more value from the money.
  • An annuity’s 30-year period is pretty long and could be subject to several unknown variables. There is no exposure to unknown future variables if you take the lump sum.

Besides the tax component, there are a few other disadvantages attached to a lump-sum payment.

  • If drawn by an individual with poor financial management skills or bad investing practices, a lump-sum payment could turn into ashes fairly quickly.
  • Not opting for an annuity means no guaranteed income stream.

Long-Term Payments

Long-Term Payments

When you opt for yearly, long-term payments, you get your lottery winnings spread over 30 years. The following are the advantages of this payout arrangement:

  • Yearly payments mean long-term financial liquidity or cash flow.
  • The smaller annual payments would put you in an income tax bracket with a lower margin than the lump sum. This means you will pay less money in taxes over a period.
  • You cannot blow through all your winnings at once. Even if you blow through your first annuity payment, you’ll realize your mistake, become wiser, and learn how to manage the later payments.
  • A guaranteed yearly payment arrangement would make it easier to make better budgets and live a life according to a certain standard.

The negatives, however, are:

  • You’ll lose the option to invest your entire winning and benefit from compound interest.
  • The yearly payments are not inflation-adjusted. In other words, the payments lose value marginally every year.
  • If you die before receiving all payments, the leftover winnings are not guaranteed to be passed on to your heirs. Multiple variables determine this, which includes the state and also the lottery itself.
  • If the lottery service provider goes bankrupt, your payments are likely gone for good too.
  • There is no option to access more than the predetermined yearly payout sum, even if you need more money for an emergency.

Things You Should Not Do After Winning the Lottery

Things You Should Not Do After Winning the Lottery

Alongside the things to do after winning the lottery, there is a list of things you should not do after winning a lottery. Unfortunately, most lottery winners are guilty of making these blunders, which is perhaps the biggest reason they end up broke after the end of it.

The things you shouldn’t do include:

  • Quitting your day job (at least not immediately)
  • Trading in your existing, fully functioning vehicle for a luxury car
  • Buying a vacation home in some other country or continent
  • Purchasing ultra-expensive lifestyle goods, such as clothing, accessories, tech gadgets, etc.

Wanting to celebrate a massive lottery win is fine, but those should not be sudden or done conspicuously. Plan out your purchases. Spread out your splurges in a way that doesn’t seem like your spending a lot. For instance, if you wanted to buy a house in an upscale neighborhood, don’t buy it outright.

Start with renting a house in the area. Buy your dream house later – maybe after a year or two of renting in. By then, you will also be sure if you want the house.

Why Do Most Lottery Winners Go Broke?

Why Do Most Lottery Winners Go Broke?

According to a statistic, close to a third of lottery winners eventually file for bankruptcy. This primarily has to do with the people who win the lottery. Besides the initial state of shock and the celebrations that continue almost forever, bad financial management skills of the winners are to be majorly blamed.

Also, people who win the lottery are typically ordinary. When regular people get suddenly hit by something as extraordinary as a big lottery prize, they become euphoric and lose contact with reality.

According to many financial advisers, the other major issue is that many lottery winners excessively help out financially distressed friends and family members. Saying no to people you care about can be tough, particularly when those seeking your help know you have the money.

How to not lose your lottery money to your near and dear ones? Hire a third party who can work as your gatekeeper. In other words, letting friends and relatives know that you are no longer in control of your own money is an easy way to say no without any heart feelings. Professional athletes usually resort to such measures after they bag huge contracts.

There is nothing wrong with giving away money without a second thought, provided the giving doesn’t turn into a series of events. The majority of lottery winners do not hire professionals, such as attorneys or financial advisers, to manage their winnings or let them know when the charity should stop.

Some of these fresh-from-the-oven wealthy individuals also put money in businesses without doing their due diligence. As mentioned earlier, if you do not understand any investment opportunity or if the prospect entails a lot of variables or moving elements, you are better off not pursuing it. Having a significant amount of money in the bag doesn’t make you a sophisticated investor.

In the end, it’s all about financial management. To achieve or keep anything in life – be it success, influence, or fortune – you should be built for it first. When real success is bestowed upon an individual with zero capacity to manage it, the result is a catastrophe.

Also, most lottery winners choose to alienate themselves from friends and family for various reasons – may be to not want anybody around their money. As a result, they are likely to become depressed, resort to excessive alcohol and drug use, file for divorce, and even commit suicide.


Winning a huge lottery is a once-in-a-lifetime event that happens in the lives of very few people. For example, a Powerball lottery is won by only one in close to 200 million people. Therefore, if you happen to be that extremely lucky person, you would want to blow up all that money. Unfortunately, when you have zero ideas about managing all that newly acquired wealth, losing it all is not very difficult.

The tips mentioned above on things you must do after winning the lottery should be seriously considered and implemented if you or someone you know who won the lottery would like to benefit from all that wealth to the fullest. Remember, the key to staying rich is not earning in the millions but knowing how to manage it.