Not all Powerball winners have happy endings. In fact, many go bankrupt quicker than you might think.
As exciting as winning the Powerball jackpot can be, not everyone who matches all the numbers has a happy ending. In fact, more Powerball winners find themselves bankrupt not long after claiming their prizes. Some studies point to people filing for bankruptcy within three to five years and much quicker than they would have if they hadn’t won the jackpot. One finding by the National Endowment for Financial Education showed that almost 70 percent of all people who win Powerball or any large windfall of wealth end up going bankrupt within a few years. So, why do so many get themselves into more financial trouble? How can such a positive life-changing event turn into a disaster? Here’s why some suggest wealth becomes a problem. And when you win a Powerball prize, you can seek to avoid these common pitfalls that tend to lead to bankruptcy.
It’s exciting when you win! There are publicity interviews and pictures with the giant check. And then your bank account adds several extra zeros to your balance. But it’s all that excitement that sometimes blinds new Powerball winners to potential pitfalls of winning. It’s a no-brainer to pay off the existing debts or buy a new house. But without planning how to save, spend, and invest every penny, that windfall becomes short-lived. There are taxes to consider, on the prize money and that fancy new home you just bought. Most people who have never experienced the responsibility that comes with wealth can easily become distracted by the excitement of winning and find themselves wasting much quicker than they anticipated.
Adding a few million dollars to your reserves is a number so significant that you might struggle to comprehend just how much it really is. Many Powerball winners go bankrupt prematurely because of this skewed perception of how much money they have. Spending becomes frivolous, and some winners try to “buy” friendships and family relationships with gifts and generosity. But after you pay off your own mortgage, your parents’ mortgage, your sister’s mortgage, and your buddy’s mortgage, you don’t realize you’ve spent almost what you used to make in five years with your traditional income before the jackpot.
Every expert suggests that upon winning a Powerball jackpot, get with a reputable financial planner to help guide your efforts with your fortune. An independent third party can keep your perspective clear and protect your assets. Many Powerball winners who go broke do so because they did not seek the guidance of a professional planner in the beginning. Or, in some cases, they chose someone who was not qualified to help with Powerball jackpot-sized wealth management.
If you had a spending problem before winning the jackpot, you’d likely have an even bigger spending problem after taking home the prize. Many Powerball winners who go bankrupt quickly because they presume the wealth will somehow make their lives better, allow for happier experiences, and fix long-term problems. But in some cases, past emotional or behavioral issues resurface, exacerbated now that millions of dollars are involved. And when the realization sets in that winning the Powerball jackpot didn’t cure a gambling problem or alcohol addiction, it can feel devastating to the individual. Marriages won’t magically become better, self-esteem challenges won’t disappear, and spending more money won’t make anyone feel whole in the long run.
Don’t be dissuaded from playing Powerball, just because so many past winners went about things all wrong. Instead, learn from those mistakes and chart a calculated plan for how you can have your Powerball winning happy ending. Not all jackpot winners have doom-and-gloom tales that end up in bankruptcy. Many go on to do big things, establish charitable foundations, and get the professional help they need to financially, emotionally, and socially plan for success with newfound wealth.