The Conversation

Here's Exactly What to Do If You Win Wednesday's $1.4 Billion Powerball Jackpot

You're more likely to have a freak encounter with a shark, get struck by lightning, or become a movie star than you are to win Wednesday's $1.4 billion Powerball jackpot—at least according to financial advisor and LexION Capital founder Elle Kaplan. But at $2 a ticket, the temptation to play is real—even if your chances of winning are pure fantasy. Just in case you get lucky and wake up Thursday a bona fide billionaire, here are five expert tips on exactly what you should do next. 1. Get yourself in the right mind-set now. Talk about a scary, counterintuitive fact: "People who win multi-million dollar lottery jackpots are statistically twice as likely to declare bankruptcy as those who don't play the lottery at all," says Kaplan, who adds this phenomenon isn't limited to lottery winners. "We see the same thing with many sports stars who suddenly fall into money, and then lose it just as quickly." But you can avoid becoming a sad, penniless statistic by getting in the right frame of mind before you purchase your tickets. "The worst thing you can do is assume that money will last forever or celebrate like there's no tomorrow," says Kaplan.

You're more likely to have a freak encounter with a shark, get struck by lightning, or become a movie star than you are to win Wednesday's $1.4 billion Powerball jackpot—at least according to financial advisor and LexION Capital founder Elle Kaplan. But at $2 a ticket, the temptation to play is real—even if your chances of winning are pure fantasy. Just in case you get lucky and wake up Thursday a bona fide billionaire, here are five expert tips on exactly what you should do next.

__1. Get yourself in the right mind-set now. __

Talk about a scary, counterintuitive fact: "People who win multi-million dollar lottery jackpots are statistically twice as likely to declare bankruptcy as those who don't play the lottery at all," says Kaplan, who adds this phenomenon isn't limited to lottery winners. "We see the same thing with many sports stars who suddenly fall into money, and then lose it just as quickly."

But you can avoid becoming a sad, penniless statistic by getting in the right frame of mind before you purchase your tickets. "The worst thing you can do is assume that money will last forever or celebrate like there's no tomorrow," says Kaplan. "Don't suddenly feel like you have to live the life of a millionaire movie actress—because it won't last." Instead, she says, the best thing you can do to prepare for the big win is decide your life doesn't have to dramatically change. "Focus on becoming financially secure and acting like life is the same," Kaplan says. "Don't fall into the trap of thinking you need to spend your wealth if it increases. It's the priceless things in life—like spending time with your loved ones or following your dreams —that create true happiness."

2. Find a financial adviser and attorney you can trust.

No matter how money-savvy you may be, nothing can prepare you managing millions in matter of minutes. So before you spend a single buck, says Kaplan, "you're going to want to get a trusted financial adviser and lawyer on your side—professionals who are well equipped to handle the complex legal, tax, and financial problems that could quickly turn your sweet winnings sour."

The right advisers can also guide you toward allocating your money in a way that reflects your values and works in your best interest, says Mary Beth Storjohann, financial coach and founder of Workable Wealth. "It's important to establish a clear-cut plan around the funds and have clarity around how certain actions may impact you," she explains. "For example, did you know there is a limit to how much you can gift a person before taxes come in to play? Having a team in place can help you create a solid plan to maximize the dollars."

When it comes to finding a financial adviser, focus your search on fee-only financial companies. "Sadly, many financial advisers are just as eager to get their piece of the payout as you are," says Kaplan, who recommends finding a fee-only fiduciary financial planner who won't paid based on products he or she sells you. "It's a little-known secret on Wall Street that only fiduciaries are legally required to always act in your best interests—when most advisers adhere to only a suitability standard, which means their advice needs to only be legally suitable and not necessarily in your best interests."

You can use resources such as the Certified Financial Planner Board of Standards or the National Association of Personal Financial Advisors to find the best financial planners. "Make sure to interview three or four—or more—planners to ensure you find the best fit for you," advises Storjohann. And with billions of dollars at stake, "don't be shy about hiring two financial planners as a part of your team," she says.

3. Resist the urge to splurge.

With beaucoup bucks to burn through, a serious shopping spree will surely cross your mind. "We've all dreamed about that tropical vacation and mansion we'd buy after hitting the jackpot," commiserates Kaplan. "But if you want that money to last, your first step should be to do absolutely nothing. You heard that right—avoid any sudden rash decisions while you cool down and get your financial ducks in a row."

In fact, Storjohann recommends sitting on your new stash of cash for a minimum of three months—and up to six. "The biggest mistake people make is committing the funds to a cause, goal or expense without weighing the options of what makes the most financial sense," she explains. "The best thing you can do is commit to placing a hold on the funds while a plan is put into place."

4. Learn to say no.

Everyone from your parents to your long-lost high school boyfriend will want a piece of your massive money pie, warns Storjohann. But don't portion out payouts just yet. First, our experts agree, you must pay yourself, starting with setting aside an emergency fund. "Stash away enough for a rainy day fund," she recommends, because despite your new billionaire status, "emergencies will still happen."

Deacon Hayes, financial coach and speaker, recommends saving six-months' worth of expenses as a start, then paying off any debt—from credit cards to car loans—in full. With a debt-free foundation and emergency fund, "you're in a good place to ensure the rest of the money will last," he says.

Beware giving big money to just anyone who could use a cash infusion. "Throwing a life jacket to everyone is one of the biggest ways people with newfound cash sink and go broke," she warns, so check in with your financial adviser before you write any big checks. "A financial adviser can help you navigate this situation by setting up estates or trusts for your children and family," Kaplan says. :This will ensure your money goes towards the right goals, and helps the right people for generations to come, while avoiding the tax and legal issues that might pop up."

5. Invest what's left.

"Investing your money," says Kaplan, "is the winning ticket for future success." Before you scoff—convinced $1.4 billion is more than enough—consider the fuss-free joys of compound interest. Because while you're likely to burn through one-million dollars in a matter of years, that same amount of money placed in a mutual fund with a moderate five-percent return rate could earn you $50,000 each year—more than the average American earns in a full-time job—while you twiddle your thumbs. "With intelligent investing, you have the chance to get a payout year-after-year rather than simply celebrating a one-time win," Kaplan says.

Don't forget to set aside money for your retirement too. "The most important time for your money to last is when you're no longer earning income, but it's the portion most people ignore," says Kaplan. "Smart investments like a 401(k) or a Roth IRA will allow your money to grow tax-free year after year for retirement."

Are you playing the Powerball? If you win, how do you plan to spend the money?