In the last couple of months Australia has seen two record lottery jackpots. The first was a prize pool of over $100m and the second around $90m. Of course, just about everyone in the country rushes to buy a ticket in the hope that they win. Everyone dreams of never having to work again, of being able to have whatever they want whenever they want. But, is it all that it is cracked up to be? Do all of their problems simply melt away because they won big or have they just created a series of problems for themselves.

First, any winner will have the stream of people coming to ask for money. Sure, there is the option of not telling people and simply trying to continue on with life as it was before. But realistically this is a big deal and you want to tell people. You tell people and they start to look for a little help here or there. Lets say you only tell family but don’t provide the capital handout, instead promising an income stream from the interest or dividends if you invest it. Who is to say they won’t become greedy? Just like the story of William ‘Bud’ Post who won $16.2m only to see his brother arrested for hiring a hit man to kill him. Why? Simply to take a share in the winnings.

The two big recent lottery wins in Australia were split between two winners, each taking $40-50m. This is a significant amount of money. The question has often come up when talking about these people; where would you start to spend it? The simple answer is that it just gets spent. People go mad with the sheer thrill of having so much money and little or no though goes into planning for the future. Granted the interest at say 5% on $50m is $2.5m a year. More than enough to survive. Even at 1% interest it $500,000, more than most people earn in a year.  The sheer size of the winning should protect you against bankruptcy.

However, a win that big brings with it a moral obligation to provide for those around you, and the less fortunate. One of the recent big winners in Australia said he would donate half of the winnings to charity. A noble cause, but that takes out half of his winnings. If he then provided money to his family to pay off debts and paid off his own debts, the very big prize pool suddenly starts to look small, potentially down into single figures. The potential earnings from the remaining capital could still be significant, but would not provide the millionaire’s income the winner may think exists. If the winner’s spending exceeds the interest income the capital gets whittled away, especially in times like these where the interest rate is so low.

There are simply too many stories of the big winners that have failed to hold onto their money. Is it because the size of the win creates the belief that the winner has more money than they could possibly ever spend? Or, is it because the winner simply does not have the ability to manage such large funds. It is probably both.

Everyone wishes for a big lottery win, but perhaps when we don’t win these big jackpots it is a blessing in disguise. It is simply too much money for most people to handle at once. Maybe, we should consider looking to win a much smaller amount. One or two million, enough to pay off the bills, wipe out the mortgage, continue working and save, make money the old fashion way. You never know, you may just find yourself in a better financial position than someone that won $50m.