Billionaire Mark Cuban offered some advice for the future Powerball winner in The Dallas Morning News earlier this week.
His first suggestion? Hire a tax attorney.
If there is a winner tonight (or winners, as it is more than likely the pot will get split) he or she can expect the federal government to siphon off a good chunk of the $1.5 billion jackpot. Setting aside state income taxes for a second, the winner will have to give the government at least 39.6 percent of his winnings in federal taxes. Hiring someone to deal with Uncle Sam sounds like a good idea.
Second, keep in mind that money doesn’t buy happiness, Cuban said. But it can make life a whole lot smoother when you don’t have to worry about the bills.
Third, get used to saying “no.” Your friends and relatives will ask you for money, but don’t feel obligated to give unless you want to.
“If you are close to them, you already know who needs help and what they need,” he said. “Feel free to help SOME, but talk to your accountant before you do anything and remember this, no one needs 1m dollars for anything. No one needs 100k for anything. Anyone who asks is not your friend.”
Fourth, don’t try to play the stock market.
“You don’t become a smart investor when you win the lottery,” he said. “Don’t make investments. You can put it in the bank and live comfortably. Forever. You will sleep a lot better knowing you won’t lose money.”
Fifth, don’t take the prize in a lump sum or you might blow it all in one place.
Sixth, don’t be a jerk. “No one likes a mean billionaire. :)” he said.
Cuban’s advice isn’t an endorsement to spend a lot of money on lottery tickets, as the odds aren’t in your favor.
“It’s OK to spend 2 dollars for entertainment value,” he said.
Sean Davis recently crunched the numbers, and found that the expected payout for a $2 ticket is at $1.12 when you take into account the odds of winning, the likelihood of splitting the pot, and taxes. Buying a ticket to entertain yourself is one thing but, as Davis pointed out, it doesn’t make financial sense to do so.