Some people think that winning the lottery will solve all of their problems. However, many make mistakes and later feel that winning large jackpots is a curse.
When I was a kid in the 1980s, a new family that had won the lottery 20 years prior moved in nearby. At my young age, I couldn’t understand how they were now living in a regular, lower-middle-class neighborhood.
Well, it turns out that many lottery winners make big mistakes. Here are some of them as shared in popular online forums.
Not Accounting for Ongoing Taxes and Maintenance Costs
Lottery winners don’t always account for ongoing maintenance fees and taxes when upgrading to a large home, cars, boats, and other expensive items. While they may be able to afford the initial purchase, some lottery winners can’t afford the ongoing costs and upkeep.
Not Accounting for Federal and State Taxes
When taking the lump sum, the winner’s amount is significantly reduced by Federal taxes. And there are only a few states that do not tax lottery winnings.
Being Too Generous
In the excitement of winning a large amount of money, some winners spend most or all of their winnings on other family members. And they can also give away too much to charity or greedy friends.
Not Saving or Investing for Later
Some winners think their money is going to last forever. When they suddenly have a million dollars, it may feel like they can’t spend it all. They let all the money slip through their fingers and then return to work after only a few years with nothing saved.
Taking the Lump Sum
When money management skills are weak before winning, they don’t suddenly get better with an enormous amount of money.
Some winners would be better off with yearly payments to help them not spend it all so quickly.
Disclosing Their Identity
Some states require lottery winners to disclose their identity. The general recommendation is to work with a lawyer to protect your privacy as much as possible. Ideally, winners would tell as few people as possible to avoid getting financial requests from strangers and long-lost friends.
Hiring The Wrong Investment Manager
An investment manager can sound like a smart idea. However, their fees can add up quickly, and of course, that 1% fee doesn’t seem like much, but it adds up quickly. They may recommend risky investments to turn to earn themselves more money.
Starting a Business that Fails
Some lottery winners decide to start a business. Having lots of money, however, doesn’t always translate into being good at running a business.
Playing the Lottery is a Mistake
While the dream of a large windfall is appealing to many, there is a prescriptive that playing the lottery in the first place is a big mistake. The odds of winning a large jackpot are extremely low, and some financial sites argue that you are better off saving and investing the money that would be spent on tickets.
And if we were to win, it may ruin your life in a few years anyway by making the mistakes already mentioned.
The Lottery Curse
There are many stories of people who won the lottery and later wished that they hadn’t. Dealing with greed doesn’t end well for many.
Some lottery winners are murdered, others end up divorced, or family members, and some die penniless.
What seemed like a blessing turned out to be a curse.
How Many Lottery Winners Go Bankrupt?
When researching, I found a statistic that says that 70% of lottery winners go bankrupt. No source is given in news articles, or they credit the National Endowment for Financial Education (NEFE).
However, NEFE says, “This statistic is not backed by research from NEFE, nor can it be confirmed by the organization. Frequent reporting—without validation from NEFE—has allowed this “stat” to survive online in perpetuity.”
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