Why is it actually not a great thing when you win the lottery?
There’s a huge misconception out there that when you win the lottery, you have it made. You finally have a ton of money and you can spend it in any way that you choose, and you never have to worry about needing money again. The truth is, winning the lottery isn’t all it’s cracked up to be.
First off, you have two main choices for how you’ll receive your lottery payments: either in one lump sum or in a lottery annuity. Many people choose to receive lottery payments in an annuity because the taxes are slightly lower, and also because they find it a bit intimidating to suddenly have a lot of money in their bank account. Without any prior experience handling this much money, it’s easy to make poor decisions when you spend it, and even when you invest it.
Speaking of the taxes, though, you’ll end up paying taxes either way — and it’s a lot of money that the government takes out. The amount of money that you “win” isn’t actually the amount that you’ll receive in lottery payments.
Furthermore, when you choose to get a lottery annuity, you’re stuck in a contract where you can’t really control your own money. Whether you want to pay off your debts or you just want to take a big vacation, you can’t control the money until it’s sent out to you. If you choose to withdraw your money early, you’ll end up facing some pretty high fines.
The fact remains that winning the lottery isn’t a perfect solution to all your problems. Most lottery winners actually end up going back to work, many end up spending all of their winnings in just a few years, and some even end up declaring bankruptcy. Regardless of whether you choose a lottery annuity or a lump sum lottery payout, it’s important to make sure that you’re monitoring your finances very closely!