Woman buying powerball tickets
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Who doesn’t dream of winning the lottery? But few appreciate just how more complicated the winner’s life becomes.

Six random numbers – 6, 7, 16, 23, 26, and 4 (the Powerball number) — this week changed the fortunes of Mavis Wanczyk, who bought a lottery ticket at a Chicopee, Massachusetts, convenience store and won a $759 million jackpot, beating the 1 in 292.2 million odds.

Wanczyk will have to navigate new and life-altering challenges, from tax implications to family members’ sky-high expectations.

Here are three easily-made mistakes any big lottery winner will want to avoid.

1. Not taking the lump sum

A Powerball winner faces a choice many of us would love to make: take a lower lump sum now, or get the whole thing over 30 annual payments. The annual payment amount increases by 5 percent annually to keep up with inflation.

Nearly all winners take the money now, which for Wanczyk would mean $480.5 million. And that can be the better financial decision.

Investing the lump sum immediately (forgetting taxes for the moment) would allow you to put more of that money to work right away and take better advantage of compounding interest. Bankrate’s compound interest calculator shows that investing $480.5 million for 30 years will yield $3.7 billion, assuming a 7 percent rate of return.

But the reality is that when people dream about reaping instant cash, they usually aren’t envisioning smart investing to maximize their savings. Rather they want to buy a lot of cool stuff, like a new house for Mom and Dad.

So, taking the annual payments may be the right choice for some who need to be forced into understanding what their new means can really afford.

It wasn’t immediately clear which option Wanczyk had picked.

2. Not seeking advice on taxes

A lottery winner should never get too attached to the headline number — like 759 followed by a big parade of zeroes.

The IRS takes a 25 percent cut immediately. If Wanczyk selected the lump sum, she’ll walk away with a little more than $360 million after federal taxes, while those who take the annual payout will enjoy nearly $19 million each year.

And there also are state taxes to consider.

As a Massachusetts resident, Wanczyk will owe the state 5 percent of her winnings, bringing down the lump sum payout to $336 million, while the annual check would drop to $17.7 million, for a total of $531 million.

While we’re still talking about unimaginably vast sums, the tax burden shows just how quickly a large amount of money can fritter away if you’re not careful.

3. Assuming the money buys it all

Winners may think their troubled days are behind them. Who needs emergency savings when you’re now a multi-millionaire?

Unfortunately, you don’t have to look too hard to find out just how often lottery winners find themselves in trouble.

Take Jack Whittaker.

The West Virginia contractor was already worth an estimated $17 million in 2002 when he won $315 million, or $114 million after taxes. Who wouldn’t want $114 million?

But Whittaker later said he wished he had torn up his ticket.

He endured one painful experience after another, from thieves stealing a total of $745,000 from his parked car on two separate occasions to facing multiple lawsuits to a string of personal tragedies.

He was broke four years after his lucky day, like many other lottery champions.

Mavis Wanczyk quit her job as soon as she learned of her $759 million Powerball win. But she might be better off giving the whole thing to charity, or at least carrying on as if she’d never won.

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