"You Won the Lottery! Now What?"

At one point or another in our lives we have all sat and daydreamed about what it would be like to inherit or win a large sum of money. The vast majority dream of buying lavish gifts or taking trips all over the world. The fact is we oftentimes think of the present and dismiss planning for the future. The cold reality is that a a million dollars nowadays can be spent in the blink of an eye if not carefully managed. Believe it or not there are countless stories of those who have struck it rich only to find themselves bankrupt a few years later.

In this article, I will touch on four basic principles that will guide you in managing your finances before you make that impulse decision to take that exclusive spaceship tour of Mars. If or when the day comes that you find yourself on the receiving end of a cash windfall, you will be much better equipped to handle that money much more confidently and intelligently.

Know your money….inside and out.

"When you fail to plan, you plan to fail"

This may sound basic to most, however, this is a key step that many neglect which leaves them not only worse off than before they had acquired their wealth, but deeply depressed as well. What many fail to realize is that there is an emotional toll that comes with handling large amounts of money and with that many relationships can be affected for the good or bad. You must understand that you are in complete control of your finances and that you must not let outside influences affect how you make decisions.

As a rule of thumb, I suggest not doing ANYTHING with your money for at least one month. It is during this time frame that emotions and impulses run high and when the road to financial turmoil begins. During this time, write down on paper a detailed list of what you plan to do with your money and the costs associated with each activity. Be sure to consider the pros and the cons about each decision and weigh each option carefully. There is a psychological advantage to doing this in that you now have a sense of ownership over your finances

First things first, you absolutely must assemble a "power" team of financial professionals.

This is the downfall of many who strike it rich in the first place because they feel as though they can do it all alone. It is imperative that you put together a highly-qualified group of financial gurus who have experience with working wealthy clients. At minimum the core of your team should include a CPA (certified public accountant), financial adviser, investment adviser, and estate lawyer.

I suggest interviewing 3-5 prospective advisers for each area of expertise. Some of the information you should get out of the interviews include outlining some of the successes of past clients, the credentials of their portfolio, and all fees associated with their services. This is not to say that you can now relax and take a hands-off approach to your money.

Stay actively involved and continue educating yourself with the knowledge of these advisers at your fingertips. Engage yourself in every decision that is made and ask questions when things aren't clear to you. If you are not 100% satisfied with their services you have the right seek another adviser.

Please note that this step is typically reserved for those who have the means to afford hiring a group of professionals. If you do not have the financial backing to afford a power team of financial professionals, do research on each of those occupations to at least understand how each professional is helpful in regards to your finances.

Pay off all debts starting with the highest interest debt first.

This step is self-explanatory, however one that is often overlooked. Many people focus their energy on accumulating more debt instead of eliminating the ones that they currently have. Contrary to popular belief, all debt is created equal.

In my book there is no good or bad debt. All debt prevents you from maximizing your overall net worth and wealth potential by minimizing the money that you have at your disposal to invest and save. With that being said, pay off all debts (credit cards, student loans, etc.) with the highest interest debt first. As Dave Ramsey states…"Debt is dumb" and "Cash is King!"

Invest for the future

This doesn't just mean your own future, but that of others as well. As the old adage goes, "with large wealth comes large responsibility." With your newly acquired wealth you now have the power to leave a lasting impression for many generations to come. The possibilities and opportunities to change lives are endless.

Consider immediately opening up trust funds, ESA's (Educational Savings Accounts), or Roth IRA's for your children and grandchildren. Donate to an organization that is near and dear to you heart (Charitable contributions are great tax write offs!). Whatever it is, make it your mission to create a legacy of giving that can passed down for
years to come.