• Bridget Sullivan Mermel CFP(R) CPA

Win at the Lottery (whether your number comes up or not)

Updated: Feb 26

What does what you thinking about winning the lottery say about your life now? Let's take it a step further...

So what if it really happens? Seriously. What would you do if you won the lottery?

Bridget Sullivan Mermel CFP® CPA and John Scherer CFP® talk about how to interpret your daydreams about winning the lottery. Then they detail next steps to take if you do actually win. The main steps are keys to many areas of financial planning.


Win at the Lottery (whether your number comes up or not)

Bridget: 1.1 billion dollars is up for grabs between Megabucks and Powerball this week. We're Friends Talk Financial Planning.

Hi, I'm Bridget Sullivan Mermel, and I've got a fee-only financial planning practice in Chicago, Illinois.

John: And I'm John Scherer. I run a fee-only financial planning practice in Middleton, Wisconsin.

And it seems interesting that serious financial planners are talking about what to do with lottery winnings, right? Seems kind of funny.

Bridget: I know, but I think, for me... I use it really in a few different ways. But really, I think it's instructive as a thought experiment. I think it's a good thing to think about. Like, how would I want to change my life if I didn't have to worry about money?

John: And it seems sort of like that fantasy like, "Oh, Yeah." I use it, sort of flipping it, "If you win the lottery, How does this happen?” But it could be real. Like, if you have changes in your life. I talk about this with clients and with friends. If you say Geez, if I had all the money in the world, I would quit my job. I would do this. I'd move. Things like that.

Bridget: Yeah, I do things with my family, or I'd buy a big palace where everybody could come. Yeah.

John: I'd volunteer, or other things.

Bridget: I'd give it away.

John: All these things.

Bridget: Yeah.

John: If those are the thoughts you have in the sort of fantasy world, right, because the odds of winning the lottery are just microscopic… If that's the case, what can I take with that and impact my life today? How can I make some of those changes today to get closer to that, whatever those goals are for you?

So I think even though it does seem kind of silly to me, I pay attention to the lottery, and it gets to be a gazillion dollars, and it's in the newspaper, and people talk about it. But otherwise, I have no idea. But then there is some real practical things to think about. What does it say about how you feel about your life and what you can actually do about it today?

Do you talk about this with clients and things, Bridget?

Bridget: You know, I have in the past. But I find that people think they would quit and spend more time with their families. And then. So I've gotten pretty much similar responses. So for me, I want people to dig a little deeper.

The other thing is that from my perspective, the first thing you'd want to do would be to draw up a the plan. That might be just because I'm a financial planner. But I would say, plan it out, like we were talking before the show. And you're like, "I don't even know how I would go about it." So you were talking about your "how to find an attorney" question. Tell me more what your thoughts are on that.

John: It's funny. It must have been the last time the lotteries got to a bajillion dollars. I must have been in the car or something thinking about like, "What would you actually do?" There's some practical things, and again sort of fantasy and silly. But it does apply to real life, too.

One of the things would be: have a plan. One of the things that I tell clients, and I'm sure you do, too. It's that, when there's a big change in their life, don't do anything for a period

of time, right? Settle down, absorb. Whether it's a loss of a spouse, whether you're you get a big inheritance.

If you don't do anything, if the worst mistake you make is leaving your money in cash for a period of time, you're going to be okay. And a similar thought process, I think, when it comes to "boy, you get that winning lottery ticket." If you match all the numbers, you go, "Holy Moly." And you don't have to do anything for a period of time. You don't have to make the claim.

And to be thoughtful about hiring an attorney and getting advice from tax and financial

standpoint. And I even thought about it to the extent of, "Would I find in attorney in my local area here in Madison or Wisconsin, versus going to some city where I'm totally anonymous?" Because I think it can change your life when suddenly everybody knows. I mean, think about who knows what your net worth is today or what your income is. There's a very, very small handful of people, maybe even 1 or 2, including you.

Now suddenly everybody knows that you've won hundreds of millions of dollars. That could be a real game changer when it comes to how your friends look at you, or your family, what expectations [people have]. So I think there's a double edged sword to it, but taking your time, and having a plan, and thinking through it really carefully, and being really careful who you tell about things, from a practical standpoint. If you had the lightning strike and you win a significant amount of money, there's no hurry.

So it's sort of the same fundamentals for me as other situations when you're not talking about $100,000,000, But $100,000. Don't be in a hurry to make a choice, right? That's how I think about that one.

Bridget: Yeah. Another thing I would say is, as you're going through this period of not doing anything, or seemingly not taking any action. So being kind of passive about it, is write down what you're thinking as far as how you might like to spend it. Just keep a log, and then things will emerge from that log that will help you to figure out what you really want to do,

say, a year or two after you get the money. That's when I would say to start taking action.

John: Yeah, that's great. And again, to me that's similar advice, when people inherit money, or your business is sold and you get a payout. Listen, you don't need to do it. We feel like we need it. I think it's human nature. We need to do something. We need to take action and do something. And so often the right answer is, "No, just take your time."

It's sort of like, I guess, Warren Buffett says about investing. There's no called strikes, meaning you don't have to do everything that comes through. But when you swing the bat, you better make sure you get a good hit. Right? Similar thought process. You don't need to do something, but you can sit back and wait for the right time on those things.

Bridget: Yeah, I think there's also a myth out there that people who win the lottery lose the money. And I haven't done extensive experience about this, but I remember hearing this American life podcast about this at one point.

And the person telling a story, as someone who sold basically what were like viatical agreements with people, so they would call lottery winners and say, “Hey, I'll give you 100 grand for this stream of money that's supposed to be paid out over your lifetime. I'll give you 100 grand for that now.”

And he would try to talk them into taking the money now. And he knew that it was bad deal for them. And it was a very easy job. Like, he could talk people out of it. So you see there's a moral dilemma for him, but it turns out that a lot of people that do win the lottery are gamblers.

And so there's an underlying gambling addiction that people have. And so if you don't have a gambling addiction and you're just doing, you gamble for entertainment occasionally because you find it fun, you don't have to necessarily lump yourself into the category of all these winners that lose all the money. And again, it's because of taking the money and going and gambling somewhere with it. And that's their choice, and that's another podcast, another YouTube show. I want to just say that it doesn't... just, winning the lottery wouldn't be bad for everybody.

John: Yeah, but there certainly can be some dark sides to it, right?

Bridget: Yeah, exactly.

John: Some other things to think about with that. At the same time, what you hit on is exactly right, too. I think there's, like...like, playing the lottery is not a good investment, right? But it can be fun. Just like going to see a movie is not a good investment, right?But I get enjoyment out of it, right.

And so, in the right context, and especially when it's in the news, and things like this, you go, "Oh!" I'll go out and buy in a lottery ticket for each of the four of us in the family. The last time I did it, none of us got a single number on any of the four tickets. You should get a prize for that, I think! But it's a social thing, And so it's not necessarily a bad thing if it's part of your entertainment budget.

Bridget: right!

John: That's part of the fun things to do with it. And even thinking about it, like, it seems silly, but it's no different than me thinking about, boy, if I would be a movie star, when I was a kid, or I want to be a pro football player. Here's what I could do if I were in this situation. Kind of interesting to think about.

And then there are some practical applications to the whole thing. I'd encourage, as part of a wrap up with things, when this comes up, certainly, in conversation as the lottery's at record high levels, but as you talk with your friends and think about your own life, what would you do? What would you actually do if you had $100,000 a week coming in? Some crazy amount of income, where... How does it apply to your real life?

Of course, if you're having a hard time putting food on the table, and you're struggling financially, one thing. But if you're relatively comfortable and you still have some of these feelings, that can be informative as you think about: what kind of life changes might you like? What things might you strive for? And the "thinking about the lottery" thing can help you

along the lines with that.

Bridget: Yeah. Great. So I think that's a great place to wrap it up. Once again, I'm Bridget Sullivan Mermel. I'm in Chicago. And this is John Scherer in Middleton, Wisconsin. And we also are both members of ACP, the Alliance of Comprehensive Planners, which is a not-for-profit group of financial planners that operate with philosophy similar to what John and I have.

Lastly, I want to remind people to subscribe. This is what gives us some credibility with YouTube and helps us keep the show going, so if you can hit the "subscribe" button, we'd appreciate it.

John: Right. Thanks so much, Bridget.

Bridget: Thanks, John.

At Sullivan Mermel, Inc., we are fee-only financial planners located in Chicago, Illinois serving clients in Chicago and throughout the nation. We meet both in-person in our Chicago office and virtually through video conferencing and secure file transfer.

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