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Three Things to Know if You Win the Lottery

If you come into a great deal of money, your goal shouldn’t be to spend it as quickly as possible.
Lottery Winner

What would you do if you won the lottery? What does a sudden injection of money, such as winning the lottery or getting an inheritance, really mean?

  1. What does Mr. Tax Man say about it?

In the real world, money doesn’t just belong to you. Whether it’s sales tax on your purchases, income tax on your earnings, or capital gains tax on the sale of an asset, tax is paid on the majority of transactions. So the first thing you would need to do is find out whether you are liable to pay any taxes on receiving your windfall, how much, and what this means. Once you know this, you’ll have a much better idea of how much money you really have at your disposal.

  1. Having money isn’t all about spend, spend, spend

Now that you have some money, your goal shouldn’t only be to spend it as quickly as possible. Take the time to create a financial plan and figure out whether this windfall is really “extra” money, or is needed to make sure you can retire comfortably and fulfill your other financial goals. Perhaps receiving unexpected funds means that you won’t need to save as much (thereby improving your current lifestyle), or you can now leave a larger inheritance, or support a philanthropic project.

While it’s tempting to spend your windfall, don’t forget about savings. No matter how young or old you are, you need to think about retirement at some point in your life. Get objective advice about the investments and savings plans that are best for you, given your age, your income, and your personal situation, by calling your financial planner.

  1. Take it easy

News of your lottery win or unexpected inheritance is sure to spread and your telephone is going to start ringing. Be careful of who you take advice from and who you give gifts to. Relatives, acquaintances, and people you’ve never even heard of are suddenly going to remember who you are and bombard you with lots of advice and possible uses for your new found wealth.

Don’t rush to do anything. Let all the excitement and novelty die down first.

If you make your financial decisions based on logic and information, not on thrills and emotion, you’ll find that your sudden gain has made you into a real winner.

About the Author: Douglas Goldstein, CFP®, is the director of Profile Investment Services, Ltd, a financial planning and investment services firm located in Jerusalem. He specializes in working with clients who live outside of the United States and want to maintain a U.S. brokerage account. Doug’s newest book, co-authored with Susan Polgar, about how using chess strategies to improve your finances, Rich As A King can be purchased at www.richasaking.com. He is a licensed financial professional both in the U.S. and Israel. Securities offered through Portfolio Resources Group, Inc., Member FINRA, SIPC, MSRB, FSI. Accounts held at Pershing LLC., Member NYSE/SIPC, a subsidiary of The Bank of New York Mellon Corporation. Neither Profile nor PRG gives tax or legal advice. Before immigrating to Israel, it is advisable to consult with a tax attorney who is knowledgeable about Israeli law. Contact at doug@profile-financial.com

The author's opinion does not necessarily reflect the opinion of The Jewish Press.

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