The Lottery Curse…and How to Avoid It
Recently, Alberta has seen a streak of lottery winners. A lucky Calgarian won $70 million on the October 21st Lotto Max draw. Two Edmontonians each won $1 million in separate September draws. In August, three winners from Sexsmith, Chestermere, and Lethbridge each netted six-figure amounts. Another Edmonton resident scored a $17 million win on July 30th.
For these fortunate individuals, and anyone else who might unexpectedly come into significant funds, Jeff Dyck, WealthCo’s Vice President of Insurance & Estate Planning, offers some valuable advice.
Take a Deep Breath
“Take a deep breath. Let it sink in,” Dyck advises. “Regardless of whether the winnings are a few hundred thousand dollars or $70 million, your life is going to change. Take some time to be mindful and think about the future.”
Easy Come, Easy Go
Winning the lottery or receiving a big windfall is a dream for many, but 70% of lottery winners lose or spend all their winnings within five years.
“We’ve seen this time and time again with professional athletes and celebrities who end up bankrupt,” Dyck notes. “No matter the sum, it’s truly amazing how quickly it can disappear.”
How to Avoid Becoming a Lottery Statistic
After taking a moment to let the news sink in, Dyck recommends giving serious thought to what you want to accomplish with your newfound wealth.
“Wealth can create incredible opportunities, but it can also lead to heartbreak if not managed properly. It’s crucial to establish clear goals and have an action plan.”
For those new to financial planning, it can be daunting to know where to begin.
“It’s important to team up with professionals who can help you navigate this life-altering change,” Dyck emphasizes. “Whether it’s a CPA, financial planner, investment advisor, or lawyer, they can help you build a plan based on your goals. Don’t make any major financial decisions until this plan is in place.”
Be Mindful… But It’s Okay to Treat Yourself
While planning is essential, it’s also important to celebrate. If you manage to beat the 1 in 33 million odds of hitting the jackpot in Canada or come into an inheritance, a fancy celebratory dinner is in order.
“You deserve something special. Just don’t go overboard,” Dyck suggests. “Splurge on something small during the initial planning period, but hold off on larger purchases until your plan is in place.”
Your team of professionals can help assess the impact of bigger purchases and ensure they fit within your long-term financial plan.
Be Like Jarome Iginla
When hockey star Jarome Iginla was early in his NHL career, he considered buying a $115,000 Porsche 911 after receiving a $500,000 signing bonus. Instead of immediately making the purchase, he consulted with his financial team. They walked him through the numbers, and he made an informed decision to proceed in his second year of his first contract.
“Our judgment can be naturally flawed,” Dyck explains. “Relying on a team of professional advisors helps avoid costly errors and unnecessary purchases. Don’t just think the money will be there forever; plan for it to be there forever. As the saying goes, failing to plan is planning to fail.”
WealthCo’s Integrated Advisory Community
WealthCo’s Integrated Advisory Community includes all the key professionals needed to grow and protect your wealth. You don’t need to be a lottery winner to start planning for your long-term goals. Everyone can benefit from a financial plan. Reach out to discuss your financial future and how our team can help you achieve your goals.
Jeff Dyck has over 25 years of experience in insurance and estate planning for high-net-worth individuals and families. Through his relationships with some of Canada’s leading tax and legal practitioners, Jeff delivers expert advice on mitigating risk and seizing opportunities for financial growth and security.
The Integrated Advisory community consists of a network of progressive CPA firms, along with best-in-class professional advisors, service, and product specialists, who work together to deliver an elevated and holistic client experience. One that optimizes both their personal and professional lives with an integrated financial strategy designed to help clients reach their goals.