|Unlucky in lottery riches
"These people believe they
are millionaires. They buy into the hype, but most of these people will go to
their graves without ever becoming a millionaire," says Wallace, who has
been in the business for almost a decade.
"In New Jersey, they manipulate the reality
of the situation to sell more tickets. Each winner takes a picture with a check
that becomes a 3-foot by 5-foot stand-up card. The winner is photographed standing
next to a beautiful woman and the caption reads, 'New Jersey's newest millionaire.' "
Winning plays a game with your head
wrote "Sudden Money: Managing a Financial Windfall," says winners
get into trouble because they fail to address the emotional connection to the
"There are two sides to money," she says. "The interior
side is the psychology of money and the family relationship to money. The exterior
side is the tax codes, the money allocation, etc. The goal is to integrate the two. People
who can't integrate their interior relationship with money appropriately are more
likely to crash and burn.
"Often, they can keep the money and lose family and friends, or lose the money and keep the
family and friends -- or even lose the money and lose the family and friends."
Pomeroy, a certified financial planner in Baton Rouge, La., has dealt with a number
of lottery winners who went broke.
"Because the winners
have a large sum of money, they make the mistake of thinking they know what they're
doing. They are willing to plunk down large sums on investments they know nothing
about or go in with a partner who may not know how to run a business."
if you get so (un)lucky?
To offset some bad early-decision making and
the inevitable requests of friends, relatives and strangers, Bradley recommends
lottery winners start by setting up a "DFZ" -- a decision-free zone.
"Take time out from making any financial decisions," she says. "Do this right
away. For some people, it's smart to do it before you even get your hands on the
"People who are not used to having money are fragile
and vulnerable, and there are plenty of people out there who are willing to prey
on that vulnerability -- even friends and family," she cautions. "It's
not a time to decide what stocks to buy or jump into a new house purchase or new
business venture. It's a time to think things
through, sort things out and seek an advisory team to help make those important
As an example, Bradley says
that on a list of 12 things people who come into a windfall will spend money on,
buying a house is at the top of the list, while investing is No. 11.
"You really don't want to buy a new house before taking the time to think about what
the consequences are," she says. "A lot of people who don't have
money don't realize how much it costs to live in a big house -- decorators, furniture,
taxes, insurance, even utility costs are greater. People need a reality check
before they sign the contract.
Evelyn Adams, the N.J. lottery double-winner, learned these lessons the hard way.
are a lot of people out there like me who don't know how to deal with money,"
laments Adams. "Hey, some people went broke in six months. At least I held
on for a few years."