If you won the lottery, how would you spend your money? Most people immediately jump to the fantasy of a new car, a dream vacation, supporting their family, or quitting their job. However, financial advisor and Spanish expert Sergi Torrens has a very different perspective. He believes that a large prize can either be the beginning of financial success or financial disaster, depending on how you manage the funds right away.
His first rule is “Maximum discretion, don’t shout it from the rooftops,” he says. Don’t share the news on social media, don’t tell everyone on your contact list, and don’t start making financial promises. You can think, plan, and work on real money management instead of responding to other people’s expectations when you quietly protect your privacy.
Another important point that Torrens explains is that most people don’t have enough knowledge of finances to be prepared for receiving a ridiculous amount of wealth so fast. Many lottery winners lose everything if they don’t understand the fundamentals of taxes, savings, investments, loans, and even how a mortgage works. Therefore, his advice starts with mindset: stay calm, be patient, and get ready to look for professional guidance before making big decisions.
Why winning the lottery can be dangerous
Sergi Torrens gives an alarming statistic in a video that he posts on social media: “70% of those who win the lottery go broke after five years.” He sees this as evidence that issues cannot be solved by money only. A big win may worsen spending habits if you already struggled with them. Financial ruin is a real possibility, particularly for those who believe they will always have money.
Speed is one of the most significant errors. In the first weeks, many winners make impulsive purchases of luxury goods, cars, and homes. Others are under pressure to cover everyone else’s needs. In both situations, they begin spending without knowing how much money will truly remain after taxes, how much their actual monthly expenses will be, or how long the prize will last.
Because of their lack of financial understanding, they think of the win as a never-ending stream.
What to do (and avoid) with a big prize
Torrens offers some very specific advice about what not to do right away. He makes some very unexpected points, one of which is that you shouldn’t rush to pay off your mortgage or all of your other debts. However, the expert warns that occasionally it can be wiser to keep your loans and use a portion of the earnings for long-term savings and investments if you have them under control and the interest rate is fair.
Understanding taxes is another important factor, “20 percent less except for the first 40,000 euros.” Torrens reminds everyone. This means that before you even see the money, the tax agency, known as Hacienda in Spain, takes a cut. You will make irrational plans and spend money you don’t actually have if you believe you will get all of the money that was announced.
So what should a new lottery winner do? Torrens’ method can be used to create a simple action plan:
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Keep quiet and engage in financial restraint.
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Don’t change your lifestyle or quit your job in a hurry.
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Consult an experienced financial advisor.
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Separate the prize into parts: an emergency fund, savings for the future, a budget for investment, and a smaller amount for short-term treats or gifts.
By doing this, you embrace the chance rather than blowing it.
Turning luck into stability
Becoming rich by chance is not a guarantee of happiness or stability. It is an opportunity that needs to be managed with the same seriousness as a business. And in order to keep a business a float, you have to learn some finance.