To quote Justin Timberlake’s character in “The Social Network,” David Fincher’s modern masterpiece about the founding of Facebook: “A million dollars isn’t cool. You know what’s cool? A billion dollars.” Founding a social networking company that worms its way into every aspect of modern life is one way to get a billion dollars, but there’s an easier route you can take right now: play the Mega Millions lottery, where the jackpot currently sits at $1.28 billion.


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Winning that kind of cold, hard cash may seem like a dream, but there are plenty of stories out there about how quickly it can become a nightmare due to taxes, mishandling of money and a general lack of financial know-how among lottery winners. If you are lucky enough to win the Mega Millions — as unlikely as that may be — there are a series of tips you can follow to make sure your lottery win results in a lifetime of lounging by the pool rather than fodder for a cautionary Lifetime movie.

Whether you’ve won the lottery and or just want to live like you did, a financial advisor can help you make the most of what’s in your bank account. Find one to work with using SmartAsset’s free financial advisor matching service.

Lottery Tip 1: Lump Sum vs. Annuity

The first choice you’ll have to make when you win the Mega Millions is whether or not to take your money in an upfront lump sum or as an annuity over a period of time. With a lump sum, your actual take home payment will typically end up being less than it would be overall with an annuity because of tax considerations.

That said, conventional wisdom generally tells lottery winners to take the lump sum. Why? Because due to compounding interest, you can invest a big portion of the money and let it grow, potentially leaving you with more money than you’d have had if you’d taken the annuity. Just make sure you make smart, safe investments — this is where having the help of a competent financial advisor is a big help.

There is one major reason you might consider taking the annuity — you simply don’t trust yourself. If you just know that you’re the type to spend all of your lottery winnings on cars, vacations and other temptations of the modern world, having it parceled out by the government over the years may be an attractive option.

Lottery Tip 2: Understand Taxes

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No one is going to feel bad for someone who wins the lottery — whether it’s the current billion dollar jackpot or “just” a normal jackpot of several hundred million dollars. The closest anyone would come to sympathy, though, would probably if they could take a look at how the tax man comes for you once you’ve won the big prize.

To start off, 25% will be taken by the IRS. Much more could end up being taken off as well, both federally and at the state level. The exact level will depend on where you live, but just face it: you could end up listing close to half of your winnings to the government. Yes, if you win the current lottery jackpot, you’ll actually have to make do with only around $500 million.

Lottery Tip 3: Be Careful

This is a bit of a catchall tip, as there isn’t just one thing you need to be careful of if you become an instant multimillionaire because someone draws the right six ping pong balls out of a machine.

You’ll need to be careful regarding your family and friends. People will come out of the woodwork looking for something from you, whether its a loan, a gift or a can’t-miss investment opportunity in a new app offering social networking through smart refrigerators. Even if you’re the most kindhearted person in the world, it’s important to keep your wits about you and not get taken advantage of.

You also need to be careful of who you trust to take care of your money. Interview potential financial advisors and make sure you find one with experience managing money for ultra-high-net-worth investors. Also, make sure you pay attention to how they get paid; if an advisor gets paid commissions for selling insurance products or securities, they have a conflict of interest.

Finally, be careful with yourself. Don’t let yourself get swept up and end up burning through your money faster than a yuppie at a farmers market.

Lottery Tip 4: Consider Not Playing Mega Millions

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Just like Matthew Broderick in WarGames, sometimes the only way to win is not to play. No matter how many tickets you buy, you are beyond extremely unlikely to actually win. The lottery is considered by many to be a “tax on the poor” — a chance at riches dangled by the state in front of poor and working people, causing them to give money to the government that perhaps should instead come from higher earners.

If you want to play the Mega Millions lottery, no one can stop you. But please keep your expectations in check and don’t spend more than you can afford on a chance at a payday that is in all likelihood not going to come.

The Bottom Line

The lottery has reached more than $1 billion dollars. For whoever eventually wins the jackpot, life will never be the same in any way. Lottery winners need to consider how they’ll get their money, what the tax implications will be and how they’ll go about protecting themselves after the big win.

Lottery Tips

• Regardless of winning the Mega Millions or any lottery, a financial advisor can make your money work for you. Finding a qualified financial advisor doesn’t have to be hard. SmartAsset’s free tool matches you with up to three financial advisors who serve your area, and you can interview your advisor matches at no cost to decide which one is right for you. If you’re ready to find an advisor who can help you achieve your financial goals, get started now.

• Investing in the stock market gives some of the thrill of gambling without feeling like you’re just setting your cash on fire. Just make sure you do your research and consider getting the help of a professional when choosing which stocks to buy.Don’t miss out on news that could impact your finances. Get news and tips to make smarter financial decisions with SmartAsset’s semi-weekly email. It’s 100% free and you can unsubscribe at any time. Sign up today.For important disclosures regarding SmartAsset, please click here.