It is a dream that many share. The idea of winning the lottery and instantly becoming financially independent sounds very appealing. Despite the miserable odds, there is a certain unquantifiable exuberance that comes from playing the lottery. For most people, part of the fun of buying tickets is fantasizing about what could be done with a few million in the bank. Trips, cars and homes - the list for many is endless. Among the respondents of a recent survey, some examples of spending included: starting a business, getting a divorce, paying off student debt or establishing a charitable foundation. What do actual lotto winners spend their money on? It is easy to play the "what if?" game, but what happens when it becomes your reality? For many the question is not of what they should buy, but how can they stop from spending it all?
The top three indulgences for U.K. National Lottery winners are: a fancy new house, a new car and a luxury holiday. In addition, one of the first things a lot of people do with their newfound financial freedom is quit their job. Their winnings have basically allowed the purchase of all the "free time" they could have ever wanted. Unfortunately, what many forget is the true costs of owning a car and many of these other purchases. Homes have regular maintenance, insurance and property taxes. All those exotic sports cars have insurance and maintenance as well.
Oil changes on the cheapest Ferrari, for example, run around $500. Over time these expenses can add up and eat away at your winnings. In fact, most lottery winners go broke after only a few years. One man went from living in a mansion to squatting in a storage shed. However, this is not the case for all lotto winners. Some very rich individuals continue to live frugally, keep their jobs and do well for themselves. However, others take a look at their good fortune and ask: "How can I put this to work?" A man named Brad Duke did just that when he won a $220 million Power Ball draw in 2005 and took home $85 million.
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He did the usual things people do: trip to Tahiti, a quick student loan re-payment and gave money to his family. What sets him apart from many other winners was his desire to grow his winnings. After establishing a family foundation, he gathered a team of financial planners and invested almost all of what he had won. His goal was to reach and maintain billionaire status over a period of 10 years. Pointedly, he was not interested in getting a big, new house or a bunch of fancy cars, at least not yet. His focus was on growing his investment, managing the company he created and spending time with his family and friends. In the end, lotto winners are still the people they were before they struck it big. They still have all the same hopes and dreams as they did before. The only difference is that they can now achieve their grander aspirations and fulfill their wilder ambitions. It is really only a matter of degrees. Most people already want a house and a car. Most people already take regular vacations. Those who win the lottery still want the same things as everybody else; they just get the "up-sized" version of it.
The Bottom Line
When thinking about what lottery winners spend their money on, just think about what you would spend your money on, it really would not be all that different.