What is the first thing you should do if you win the lottery?

Winning the lottery is an exciting event that can dramatically change someone’s life. With a sudden influx of money, big lottery winners may be tempted to make extravagant purchases or quit their jobs right away. However, financial advisors strongly recommend taking some essential steps first before making any major lifestyle changes.

Verify the Winning Ticket

The very first thing a lottery winner should do is verify the winning ticket. Make absolutely sure the ticket is a legitimate winner by having lottery officials confirm the numbers. Some lottery winners have lost their winning tickets or had them stolen by someone claiming they were the real winner. Verify the ticket is a winner before announcing it to the world.

Sign the Winning Ticket

Once the ticket is verified, sign it immediately. Put your name on the back of the ticket so no one else can claim it belongs to them. Signing the ticket establishes legal ownership.

Make Copies of the Ticket

Make several copies of the front and back of the signed winning ticket. Keep the original in a very safe place, such as a safety deposit box, and keep copies in other secure locations. Give copies to trusted family members or advisors. The multiple copies ensure the ticket numbers are documented in case the original gets lost or destroyed.

Assemble a Team of Advisors

The next crucial step for a new lottery winner is to put together a team of experienced professionals to provide guidance on managing the money wisely. This financial advising team should include an attorney, a tax advisor, and a financial planner.

Hire an Attorney

A lawyer can advise the lottery winner on legal matters like protecting assets from creditors, creating trusts, and staying compliant with any lottery rules. The attorney can also field media and other requests on the winner’s behalf.

Retain a Tax Advisor

An accountant or other tax professional is critical for addressing the tax implications of a big lottery windfall. There are taxes to be paid on lottery winnings, and complex tax situations may arise depending on the winner’s current assets.

Work with a Financial Planner

A financial planner provides long-term advice on managing and investing lottery winnings wisely. This includes budgeting, banking, and investing to help the money last and grow over decades without being squandered quickly.

Decide Whether to Remain Anonymous

In some states and jurisdictions, lottery winners can choose to remain anonymous and keep their names out of the public announcements about big prize winners. Remaining anonymous helps avoid harassment from strangers asking for money and other downsides of sudden fame and publicity.

Learn the Rules Where You Live

Rules about winner anonymity vary significantly depending on where the lottery ticket was purchased. Some states require full disclosure, while others prohibit releasing a winner’s identity. Know the laws before deciding whether to try to claim winnings anonymously.

Weigh the Pros and Cons

There are valid arguments on both sides of whether to remain anonymous or not. Anonymity prevents problems with long-lost relatives and friends asking for money, but it could also raise suspicions of fraud or escaping debts or taxes. Consider the pros and cons carefully.

Use a Trust If Allowed

Where permitted, setting up a trust through an attorney and claiming winnings in the name of the trust can provide some anonymity without using an entirely different individual’s name and identification.

Secure the Winning Ticket

While going through the initial steps of verifying the ticket, assembling advisors, and deciding on anonymity options, it is essential to keep the signed winning ticket very secure. Do not carry it around in a wallet or purse where it could easily be lost or stolen. Keep it in a safety deposit box or home safe until ready to claim the prize officially.

Avoid Publicity

Try not to tell anyone other than those who need to know at this early stage. Co-workers, acquaintances, and even some family may come asking for money if word gets out. Keep the circle small.

Beware of Scams

Criminals prey on lottery winners, contacting them with phony business deals, investment opportunities, and charitable causes. Do not respond to any unsolicited offers, and run any major financial decisions by the advisory team first.

Claim the Winning Prize

To actually receive the lottery jackpot amount, winners must go through a formal claims process defined by the particular lottery game’s jurisdiction. This typically involves filling out and submitting a claim form and W-2 tax form along with the original winning ticket.

Meet Deadlines

Lotteries have strict time limits for claiming prizes, often expiring within 3-6 months of the drawing date. Check the claim deadline and be sure to go through the process well before time runs out.

Verify Identity

Proving one’s identity is part of the lottery claims process. This is done by presenting photo ID, Social Security number, proof of residency, and other identifying details as required.

Decide Payment Options

Lotteries typically offer a choice between an annuity paid out over many years or a reduced lump sum payment. Consider the options carefully with help from the financial advisory team.

Pay Off Debts

Before running out and making lavish purchases, one of the smartest things a new lottery winner can do is pay off any existing debts. Pay off mortgages, student loans, car loans, credit cards, and any other outstanding balances.

Pay Mortgage and Loans

Paying off big debts like a home mortgage provides immediate financial stability and peace of mind. Paying off other large debts also frees up monthly income that was going to debt payments.

Pay Credit Cards

Carrying credit card balances can carry high interest rates, so paying those off makes financial sense. However, it may be wise to keep older credit card accounts open to retain a longer positive credit history.

Pay Back Friends and Family

If you borrowed money from friends or took loans from family members, it may feel good to pay back those informal debts and remove any pressures or guilt associated with the obligations.

Set Aside Taxes

Taxes represent one of the biggest single payments new lottery winners face. Income taxes apply to the prize money, often at top rates. Your tax advisor should estimate taxes due so you can set aside enough to pay.

Federal Income Taxes

Federal income tax rates up to 37% apply to lottery winnings for U.S. citizens or residents. Your tax bracket depends on total taxable income for the year including the prize money.

State Income Taxes

Some states also tax lottery winnings, at rates ranging from about 3% to over 11% depending on the state. This is in addition to federal taxes owed.

Pay Quarterly Estimated Taxes

Large lottery winners may need to make estimated tax payments quarterly to avoid penalties for underpayment. Your tax advisor can assist with estimating tax liability.

Set Up an Emergency Fund

Financial experts recommend establishing an emergency cash reserve fund to cover unexpected expenses and prepare for financial shocks. A lottery windfall provides an opportunity to create a substantial emergency fund.

Save 3-6 Months of Expenses

Aim to set aside enough emergency cash to cover 3-6 months of living expenses in case of job loss, medical issues, major home or car repairs, and other unforeseen costs.

Keep in Very Liquid Accounts

Emergency fund money should be kept in checking, savings, or money market accounts that allow easy access. It should not be invested in assets at risk of declining in value.

Avoid Tapping the Fund

The emergency account should only be used for true emergencies, not discretionary spending. Replenish any amounts used as soon as possible.

Invest for Long-Term Growth

Rather than spending the entire lottery fortune right away, winners should invest a substantial portion for ongoing growth to support financial needs the rest of their lives. A financial advisor can provide guidance on suitable investments.

Consider Conservative Assets

Bonds, index funds, real estate investment trusts and other relatively low-risk, income-generating assets are appropriate for lottery winners needing long-term, steady growth.

Avoid High-Risk Investments

Lottery winners should resist investing sizeable portions of their windfall in speculative, highly volatile assets. Overexposure to risky tech stocks, crypto, venture capital or similar assets could lead to big losses.

Diversify Your Portfolio

Diversifying among different asset classes and market sectors provides safety against downturns affecting isolated parts of the market. Work with advisors to diversify prudently.

Budget and Plan Spending

It can be tempting to go on an unrestrained spending spree with lottery riches, but winners should take time to carefully plan their spending. Creating and sticking to a realistic budget is essential.

Live Below Your Means

Determine your new means but still aim to live below them. Budget based on moderate interest or dividend income rather than spending down the principal lottery winnings right away. That ensures money lasts.

Allow Modest Splurges

Building in a modest amount for some fun splurges is fine as long as they don’t become too extravagant. Perhaps allot 5-10% of income for special expenditures.

Review Spending Habits

Look for areas where you may spend more consciously, like eating out, travel, subscriptions, or other discretionary costs. A spending review helps align with budget.

Help Family and Friends Carefully

It’s natural to want to help out family members and close friends after a financial windfall. However, providing assistance should be done with care to avoid jeopardizing relationships or enabling bad behaviors.

Set Limits

If gifting money to relatives or friends, set clear limits up front on the amounts. Make the gifts one-time occurrences rather than open-ended commitments.

Consider Non-Cash Help

Rather than directly gifting cash, you may pay certain bills, cover specific educational expenses, or provide professional services. This targeted help lessens potential issues.

Say “No” When Needed

Some requests for money will be unreasonable or enable poor habits. It’s okay to say “no” politely when appropriate. Don’t wreck your finances to help others.

Give Back Thoughtfully

Giving back to charities and causes is another positive use of lottery winnings for those so inclined. Be strategic in your approach to philanthropy.

Focus on Meaningful Causes

Determine causes aligned with your values like education, arts, human services, or environmental issues. Research charities thoroughly before giving.

Consider Starting a Foundation

Wealthy philanthropists often establish family or personal foundations to make gifts in a strategic, businesslike manner. This provides ongoing charitable impact.

Give Time and Expertise Also

In addition to providing money, commitments of time, talent, connections, and expertise can greatly magnify charitable impact.

Avoid Over-Publicity

Some lottery winners end up regretting going too public too fast with details of their winnings. Keeping a low profile is usually wiser.

Decline Media Attention

Turning down interview requests prevents being deluged with appeals and scams. Avoid announcing the jackpot on social media as well.

Keep Working If Possible

Quitting a job immediately can draw unwanted attention. Try to maintain some normal routines and social connections.

Make Changes Gradually

Lifestyle changes like moving or traveling will attract less notice if done over time. Rapid shifts tend to arouse more curiosity.


A staggering lottery prize requires discipline and prudence to manage successfully. Avoiding common pitfalls like spending sprees, risky investments, and publicity overexposure is critical. Taking the time to verify winnings, assemble expert help, pay off debts, set aside taxes, and create a long-term financial plan sets lottery winners up for sustained security and happiness.

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