If you win the lottery, it’s important to take some time to think about how you’re going to use the money. It’s easy to let emotions guide your spending habits when you win big, and it can be dangerous to give your winnings too much power.
First, you’ll want to decide whether you want to receive the prize in a lump sum or as an annuity payment. Both options are tax-deductible, but a lump sum will typically provide more control over how you spend the money right away.
Second, you’ll want to set up a team of financial experts to help you manage your money. Many people suggest assembling a team consisting of an accountant, a lawyer and a financial advisor.
Third, you’ll want to keep your name anonymous. In the past, lottery winners have been targeted by masked men.
Fourth, you’ll want to stay in touch with family and friends. Lottery winners can become embroiled in legal claims from co-workers and others who are jealous of their wealth, and it can be difficult to remain secretive for long.
Fifth, you’ll want to invest your winnings in high-return assets, like stocks. This is often a good way to generate returns and increase the amount of money you receive each year, which can help offset your initial tax bill.
You’ll also need to consider federal, state and local taxes. Winnings are taxed according to federal tax brackets and state and local tax rates, so it’s best to get a lottery tax calculator before you claim your prize.