The third-largest Powerball jackpot in U.S. history, worth a whopping $768 million, was just sold in Wisconsin on Wednesday.
But while the winning ticket holder just got rich, that doesn't mean all their financial worries will go away. In fact, lottery winners are actually more likely to declare bankruptcy than the average American.
CNBC Make It spoke to money experts about what to do when you come into a huge windfall. Here are three mistakes they say you should avoid if you want to make the most of your money:
While $768 million seems like a lot, it can vanish quickly if you're not responsible with it. Instead of splurging on an airplane or a yacht, place a significant portion into an emergency fund or a high-interest earning savings account. Get rid of your loans and other obligations, too.
"Pay off all high-interest debt immediately, and then tackle the rest of your debt," says Rich Ramassini, a certified financial planner and director of strategy and sales performance at PNC Investments. "The remaining funds can be used for your daily living expenses and put aside for expected future purchases."
You can also invest in the stock market, but if you choose that option, be sure to do your homework first. Self-made billionaires and expert investors Warren Buffett and Mark Cuban suggest index funds, especially if you're a beginner. Index funds hold every stock in an index, so they're automatically diversified and tend to be low-cost. Plus, because they fluctuate with the market, they're typically less risky than picking individual stocks.
Once you've met your financial obligations and consulted a team of professionals, don't forget to have some fun. "Do not deprive yourself," says Ramassini. "Feel free to spend a bit on a dream vacation or a new car."
Managing millions of dollars is a huge responsibility. Don't be afraid to ask for help. "The first thing to do is contact a financial planner and an accountant," says Greg McBride, chief financial analyst at consumer financial company Bankrate.
"Don't quit your job or make any big decisions," he says. "That can wait until the dust settles."
Ramassini agrees with McBride, adding that a planner can help prioritize your needs and create a budget and can also help you decide whether to take the money in a lump sum or in a series of payments.
"Think of this person as the quarterback of your advisory team. He or she will review your new financial situation and help you establish your goals for spending, saving, giving and investing," he says. "They will help you outline short- and long-term goals while factoring in the outlook for inflation and investment market volatility over the next 50 years, depending on your life expectancy."
Also, a planner "will advise you about the tax obligations related to your winnings and how they may impact your planning," adds Ramassini. They can help you "prioritize how to allocate the remainder to meet your financial goals."
"When you're talking about that large of an amount," says Nick Holeman, a certified financial planner at online-investment company Betterment, "your situation gets very complicated — and very quickly. You'll be subject to higher rates of taxes, your tax deductions get phased out…and you have new taxes that you weren't even subject to before."
You may want to consider hiring an attorney who can strategize with you about how to protect your money, now and going forward. "You will need their help in preparing a will and an estate plan or trust accounts that reflect your newfound financial prosperity," says Ramassini.
"Those documents are designed to protect your financial future, as well as provide for future generations."
Aside from a few family members, your close friends and your financial team, you shouldn't broadcast to the world that you just won the lottery. Unfortunately, that's not always easy. A New Hampshire woman who held the winning January 6, 2018 $559 million Powerball ticket had to go to court in a fight to remain unnamed.
Some states will allow winners to remain anonymous, while others are less forgiving, including Wisconsin. Still, if you live in a state that will publicize your identity, you can usually create a trust fund or another legal entity to receive your winnings.
If you plan ahead, it may be easier to keep a low profile. "While you might want to shout this life-changing news from the rooftops," Ramassini says, limit your circle of confidantes.
"Money can change, disrupt or end relationships. It can also lead to you hearing from relatives or friends you never knew existed," he says. Plus, "fraudsters and thieves are paying very close attention and are already scheming up ways to find the winner and steal his or her money."
This is an updated version of a previously published story.
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