With the recent Powerball and Mega Millions lottery numbers skyrocketing right now, it is easy to imagine what we might do with that money. Some people would splurge while others would be modest. I’d like to think I would be somewhere in the middle. I think I have a good head on my shoulders when it comes to money. However, that is easier said because we do not truly know how we would react if we won 1 billion dollars or any life changing money.
It is crazy to think about though, I often fantasize what it would be like and what I would do. Maybe one day my luck will prevail and I will win, hell, I would settle for $50k (after taxes of course).
For this example, let us assume you won the 1 million prize. Someone last week won a million dollars in Northern IL, good for them. Back to the example, after taxes let us say you end up with $700k. That is a pretty good chunk of change and still in the category of life changing. With that kind of money you could pay off all your debts, put away some for retirement or investment account and the rest to have fun with.
But, let us begin the example. This is what I would personally do. Your idea might be different than mine and that is ok. I would love to hear how you would spend this money in the comments below.
Home Buying – $400k (Home cost plus any renovations)
- I do not own a home yet so this is where I would put a good portion of my winnings. I would like to have a house that the only thing I have to worry about is taxes and repairs.
401k Account- $150k
- This is important. That $700k will go fast and I think having a backup for when the time to retire comes around is a good option. Most people end up with $240k-$500k by the time they retire. The $240k is not great but you will survive if you plan. This $200k jumpstart will put you on the right path.
Investment – $100k
- Investing for the future is key to financial freedom. By putting $150k into your 401k account, you are setting yourself up for the future. It is a good safety net. However, until retirement comes, playing around and investing this money in safe and reliable stocks can set you up for an even better future. I estimate for my own portfolio that I will need $280k to live comfortably, while having an estimated $300k 401k account. This $100k would give me a nice jumpstart.
Fun – $50k
- The rest of the money I would use for vacations, fun things around the house, possibly trading in one of my cars and get a new one. This is the money you spend without worry; this is your fun money.
I would love to see how you would spend your money in the comments below. Thanks for reading!