Would you lose it all if you won the lottery?

Staff

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About This Quiz

Hooray, you’ve won the lottery! Sayonara cash-strapped days, hello multimillion-dollar payout! Can you manage to hang on to your winnings, or will you become a lottery loser?

You've just realized you have a winning lottery ticket. The first thing you do is:

One of the best indicators of how you'll handle your lottery winnings is what you do first. If you make snap decisions and start spending scads of money, chances are you'll blow through your windfall in no time flat. So, save your money.

If you win a $4 million jackpot, what's the payout?

Whatever amount you win in the lottery, you'll need to pay about 50 percent in taxes before you ever get your hands on the winnings. So before you order that custom Jaguar, make sure you can afford it.

What is the best post-lottery financial plan?

Have you ever wondered why some lottery winners don’t come forward immediately? They're probably mapping out their financial plan with a team of experts. It's a smart way to make the most out of your winnings.

With your lottery winnings in hand, it's time to join the ranks of the uber-rich. The first step is:

Don't rush to judgment, no matter how tempted you are to buy your favorite sports team or shop for your dream home. The key to holding onto your money is to save and invest, while allowing for only a few special purchases.

You've just won mega-millions, whose advice should you seek first?

One of the best ways to hold onto your money is to protect it. Seek legal counsel and develop a plan of action, before stepping forward with your winning ticket. Because once you do, scores of people will be ready for a handout. After you talk to the lawyer, then talk to a financial planner.

Which of these would you be most likely to do with your tax refund?

How you spend (or don't spend) your tax refund is a good indicator of what you'd do if you won the lottery. If you have a habit of treating your refund as "mad money" by spending it on clothes, trips or friends, then you'll probably burn through lottery winnings quickly. Instead, save it.

What is the typical state of your checking account?

If you manage your money well, those habits will influence your behavior after winning the lottery. However, if you frequenty overdraw your checking account -- or run it nearly on empty -- you'll need some clear boundaries when it comes to spending your millions.

You have a lottery ticket with the winning numbers. What should you do first?

A lottery ticket can be redeemed by anyone who has signed it and can produce a matching photo I.D., so be sure to sign your ticket immediately upon winning -- or you could lose it all.

Should you accept the lottery payout as an anonymous winner?

If state laws allow, it's a good idea to accept your lottery payout as an anonymous winner. Some past lottery winners have received threats, required police protection and lost their money to unscupulous investors.

Now that you've won the lottery, family members have come asking for help. What should you do?

It's a good idea to set aside a portion of your lottery money for charitable organizations and people you know who could use a helping hand. When you budget for this amount ahead of time, you'll be less likely to burn through your money by accommodating every financial request.

Are you more likely to lose it all if you take a lump-sum lottery payment rather than annual installments?

Most lottery winners (some reports claim up to 90 percent) take a lump-sum payment. However, having your winnings doled out annually could encourage more financial stability -- and protect your finances from impulsive mistakes.

What's one secret to living off your lottery winnings, long-term?

If you place your lottery winnings in long-term investments, you should make enough interest to cover your living expenses, leaving you a nest egg for the future.

You've just received the check representing your massive lottery win. Where should you deposit it?

Beware of FDIC limits at most banks; the FDIC only insures up to $250,000 per account. Instead, take your check to a large brokerage firm, which can help you divide the winnings across several accounts.

Where's the best place to stash your winning lottery ticket?

Your best best is to keep your winning lottery ticket in a safe depost box at the bank. If that's not an option, you could store the ticket in a large, fireproof home safe.

If you won the lottery, a firm understanding of which theory could serve you well?

Prospect theory is an oft-used educational tool in financial investing. This theory posits emotions are more powerful than reason, which is why investors will refuse to acknowledge a poor decision -- even as stock prices slide.

What is one personal factor that can ensure your lottery winnings last the rest of your life?

When 82-year-old Charles Maginnis won the lottery in 2011, headlines captured a surefire positive about age: Maginnis probably wouldn't outlive his lottery earnings. So, if you've already retired when you strike it rich, don't feel too bad about a couple of financial splurges.

True or False: Lottery winners don't need budgets.

If you are a lottery winner, you'll need a budget more than ever. Having guidelines that direct your spending can help you manage your newfound wealth and banish regrets.

What is an unexpected pitfall after winning the lottery?

According to the National Endowment for Financial Education, people who receive an unexpected financial boost -- like a lottery win -- are often unprepared to deal with the psychological consequences, which range from feelings of guilt to anger.

Most people think winning the lottery will bring:

Despite what most people think, money, no matter how much you gain, can't magically make you happy. In fact, it may create some new stresses for you.

What is the "lottery curse"?

The "lottery curse" occurs when someone wins the lottery, only to have multiple things go wrong. Whether falling onto hard times, losing loved ones or experiencing misfortune, the "lottery curse" is a very real concept to some winners.

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