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So you've won the lottery - poor you!
Jasmine Birtles from Moneymagpie.com says that coming into big money isn't always the stuff of dreams. It could be your worst nightmare
Spare a thought for poor Angela Kelly, who has just won £35 million in the Euromillions lottery. The single mother and former postal worker became Britain's biggest lottery winner after buying a £1.50 ticket, defying odds of one in 76 million.
It's going to be a hard road for Angela over the next few years as she and her family learn to adjust to a life of luxury. If you're not used to money (and sometimes even if you are) winning or earning millions can be a terrible shock to the system and can bring on family break-ups, violence, illness and even death.
We all accept, theoretically, that money can't buy you happiness, but most of us would like the chance to find out for ourselves. We quickly forget that mega-bucks can sometimes give you more misery than joy. The untimely death of former Playboy model, Anna Nicole Smith, and Robbie Williams' re-entry into rehab are just two of hundreds of similar stories.
An American winner, William Post, scooped $16.2 million in the Pennsylvania lottery in 1988 but now lives on Social Security. 'I wish it never happened. It was a total nightmare,' he said.
A former girlfriend successfully sued him for a share of his winnings, then one of his brothers was arrested for hiring a hit man to kill him, hoping to inherit a share of the winnings. Other siblings pestered him until he agreed to invest in a car business and a restaurant which both lost money and drove more of a wedge between him and his family. Within a year, he was $1 million in debt and deserted by family and friends. He eventually declared bankruptcy and now lives on $450 a month and food stamps.
In the US, there is even something called the 'Sudden Money Institute' which deals with people who have suddenly had a windfall. 'In our culture, there is a widely-held belief that money solves problems,' says Susan Bradley from the Centre. 'People think if they had more money, their troubles would be over. When a family receives sudden money, they frequently learn that it can cause as many problems as it solves.'
What do you do if you suddenly inherit, win or earn a big lump of cash?
According to specialist advisers, there are a few things you can do to keep your head - and your cash - while all around are losing theirs:
- Take time - at least three months - to address the emotional fall-out connected to coming into money. It will take a while for you to adjust to your new-found situation and work out properly what you want to do with it. Put the money in a high-interest cash savings account while you think.
- Also take time to think about and research investments you might want to make. Many lottery winners lose all their money, and more, by thinking they are on a lucky streak and can put money into anything for profit.
- Don't rush into buying anything until you have talked it through with advisers and done some research. If you haven't lived in a big posh house before you won't know just how expensive it is to keep it going. Find out the running costs of a new home/car/art collection before committing your cash to it.
- Keep your friends and family with you. This is where you see who really cares for you. Some will demand money but you have to be firm. If you want to give to them then do it but make sure it is not because of pressure. Those that reject you because you have not given are not real friends, even if they are family. If they see that you are firm and not throwing money away on yourself either, they will come to respect you after a while.
- Get a plan. Once you have taken time out to cope with things emotionally, look at where you are financially. Pay off any debts (including your mortgage), check on your insurance cover and start thinking about what your new goals are and how much money you will need to achieve these.
- Surround yourself with good advisers. You will need an accountant, a financial adviser who specialises in high net-worth individuals and probably a lawyer to help set up trusts and also protect you from possible law-suits from former friends!
- Consider charities. Studies have shown that contributing to the welfare of others gives us happiness and fulfilment. In the case of charities it is also tax-efficient. The ancient custom of 'tithing' (giving 10 per cent of your income to the church) is a good benchmark for your giving level. Set aside at least that amount to give to good causes or to set up your own charity.
Jasmine Birtles is from Moneymagpie.com, the website that gives you a richer life.
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