Written by Elizabeth Young, Associate Planner

I don’t usually gamble. But I, along with millions of other Americans, will throw a few bucks in to buy a lottery ticket or two with some coworkers every now and again. When we do it, we have the usual water cooler conversation about what we would do if we won. While there’s usually talk of what everyone’s respective big purchases would be, given the financial nature of our firm, the conversations in our office include a few points that many people tend to forget about. Here are a few tips from our water cooler discussions to remember if you happen to hit the jackpot (please don’t hold your breath):

1. Take your time. Don’t rush to claim the prize; there are things that you should get done before your life turns upside down! You may have the option to collect your winnings without a news conference; this is a good thing if you value your privacy. Take the time to get an unlisted phone number. Your phone will begin ringing off the hook with people reaching out to you for loans, gifts, charitable contributions, etc. Begin lining up financial professionals to help you navigate through everything.

2. Enlist a team. At the very least, you’ll want to recruit the help of an accountant, a lawyer and a financial planner. Beginning your search prior to claiming your prize will help weed out the advisers that are overly interested in your newly found wealth. Plenty of financial professionals from a variety of backgrounds will likely offer to assist you. Keep in mind that referrals from friends and family can be helpful, but you’ll want to make sure you interview advisers that have experience with the wealthy. Resources for finding trustworthy advisers include the Certified Financial Planner Board of Standards, the American Institute of CPAs and the National Association of Personal Financial Advisors. Once the news of your newly found fortune breaks, friends, relatives and complete strangers can be directed to contact one of your advisers; your team will provide a barrier for you.

3. Making the big decision. One of the most important decisions you’ll have to make is how you wish to receive your winnings. Typically, you’ll have to choose between a series of annual payments or a lump sum amount. The annual payments will add up to the total you won and the lump sum will be reduced assuming you could invest what you get and earn what you would have received with the annuity option. The lump-sum-versus-annuity equation is complex and should be discussed thoroughly with your financial team before deciding how to take the money. Here are a few questions to ask yourself to begin assessing which is better for you:

-Do you carry credit card debt, get a big tax refund and occasionally (or always) scramble to pay bills? The annuity option is often a better, safer bet for those who struggle to live within their means and have trouble managing their money.

-Do you have a big emergency fund, sizable retirement accounts, no consumer debt and enjoy learning about finance? The lump sum may work for you, but you’ll want to consult your financial experts about the tax and investing implications.

4. Keep expectations in check. It is possible to spend too much; winning the lottery doesn’t mean you now have unlimited resources. Don’t be too quick to indulge in a new lavish lifestyle. While new cars and houses are common purchases for lotto winners, do the math on how much that new car and/or house will cost you (including higher property taxes, insurance, maintenance, repairs and utilities). Again, your financial team should be able to help you lay out a plan to help ensure your funds will last your lifetime.

While a celebration is certainly in order if you win the lottery, don’t forget that there are a few important steps you’ll want to take to help ensure your journey as a lottery winner is a success!

Note: This is not an endorsement for utilizing the lottery as a means to achieving financial success!

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