You might have missed but the US is currently abuzz with
news of a $1.5b (sh4,700b) lottery jackpot that was won last week. It turns out
the money will be shared between three ticket holders in three different states
– Tennessee, Florida and California.
History shows that these lottery winners often blow all the
money they win, leaving them worse off than they were before the event. With
such windfalls they go out and splurge on bigger houses, bigger cars, boats and
so when the money runs out as it always does they find themselves deeper in the
hole in trying to maintain their new lifestyle.
In the event that you land on the windfall of a life time
what should you do.
1.
Adjust your thinking
Thankfully this is coming before your windfall. You need to
adopt the attitude of the rich, which is that money is not for eating, it is for
making more money. Just because you have a lot of money does not mean you will
always have a lot of money, but by deliberate action you can not only stretch
out your windfall but actually get to the point where it is working for you,
throwing off more and more income into the future. One difference between the
wealthy and the rest is that they consume less of their income than they
invest, and the richer they get the less they consume in relation to their
total income than they consume. To tell if you are a rich person or not when
you get a windfall you will more likely think of all the good things you will
buy and then once done will think of investing --- the truly wealthy think the
other way around.
2.
Meet your tax obligations
Even if you win at the lottery the tax man’s obligations
have to be met, however painful this is. Because even if you finish the money
before they get to you they will hound you till you pay them, as they should.
As it is now lottery earning attract a tax of at least 15 percent. Don’t try
and be clever. As it is now if you buy any property of above Sh50m on transfer
you will have to show how you got them money to buy and if you are not tax
compliant they will slap you with a 30 percent tax on the cost of the property.
So why not do away with the pain at the beginning, you might even pay less
instead of suffering death to the taxman, by a thousand cuts!
3.
Park the money away
In case the windfall came out of the blue – like the three
lottery winners in the US, park the money away. Either open a fixed deposit
account (with that kind of money the banks will be falling over themselves to
have you as a client) or buy government paper. This will not only allow you to
start earning off your money but will also give you time to think or get sound
advice on how to employ your monies.
4.
Don’t be a hero
We all like to have the ego satisfaction of saying that is
my business, that you employ people, that your business makes money for you as
you sleep. But business like every other worthwhile endeavour in life takes
time to learn. Think of it this way, It does not mean because you have all the
text books for P1 to P7 when you are in P1 that you know very thing. You have a
head start yes but that’s all it is, you are going to have to bear down and
learn the things in the books and that takes time. The worst thing that can
happen to any businessman is to start off with a lot of money. Park the money
and live off the interest and if your entrepreneurial itch persists use some of the interest to start experimenting on business, learning as you go. If you
jump in with a lot of money you will soon find out that money is not the main
ingredient in a successful business.
5.
Investing in yourself
Related to the above the smart thing to do is invest in
yourself. And I am not talking about buying fancy clothes or fast cars or
women, I am referring to learning. Buy a book, go to a seminar or pay a good
advisor in the enterprise you may have set your sights on. Inspirational speaker Robin Sharma says, “To
earn more you must learn more.” He goes further to say, “To double your income
you must triple your rate of learning.” The point is the difference between
living happily ever after off your windfall or looking back on “the good old
days” after falling back into destitution will depend on the content of your
head.
Good luck to you!
