Wouldnt it be great to start off a new season with a boat load of cash? I mean the amount of cash you could use to pay all debts, put your kids through any college (and grad school), buy the home of your dreams and a vacation home, and still have enough money left over to give generously and then live off the interest.

Probably the best get-rich-quick scheme that has made people into instant millionaires is the lottery, in most U.S. states. Have you wondered what you would do with all that money if you won the lottery? Well, most likely you would pay off all your debts, put some away for the kids to go to college, buy a larger house, buy a second house, buy a few really nice cars, and then live peacefully off the interest. Yes, that would be great, especially the peaceful part. Thats how those lottery winners live their lives, right?

Not according to Susan Bradley, who wrote Sudden Money: Managing a Windfall. Bradley found that lottery winners and others who come into new cash will either keep the money and lose family and friends, lose the money and keep family and friends, or lose both. Very few lottery winners keep the money and keep family and friends.

As I researched lottery winners and their lives post-winning, I found this is true many times. Regardless of whether people kept the money or lost most of it, I was interested in why many do not keep family and friends. For most, it was because people wanted the lottery winner to invest in their business ideas, and the new millionaires refused (and the family or friend dropped them), or the new millionaires invested, and it was a bust (and the millionaire dropped the family or friend). For some, it was because people wanted the winner to support them or give them free stuff.

Janite Lee won $18 million in 1993 in Missouri. She generously gave money to charities, schools, politicians, and education. Eight years after winning, she filed for bankruptcy. She had $700 left.

Billie Bob Harrell won $31 million in 1997 in Texas. He was to receive $1.24 million annually for 25 years. It was great at first. He bought a ranch. He bought homes and cars for himself and family members. He gave generously to his church and to people in need. A lot of people came to him requesting money. But the giving, lending, and spending got out of control. His wife left him a year later, and in 1999 he killed himself.

Sometimes just being a relative of a lottery winner is bad news. In 2004 in Illinois, a teenage girl whose grandfather won the lottery a couple years earlier overdosed on drugs, which she was able to buy because her grandfather supplied the money. Other teens who knew she had a lot of money pressured her to buy the drugs and use them.

Just like when psychologists say that love and hate run closely together, so do sudden wealth and sudden loss. People who come into money quickly, such as lottery winners and people who receive large inheritances, usually make decisions too soon. They put their house on the market and buy a new one right away. They buy several cars, quit their jobs, and invest in ideas that sound great.

So what can a person do to protect themselves when they suddenly find themselves with a lot of money?

The first is to proclaim a moratorium on decision-making. They should put the money into safe investments for the time being and then take some time (say, 3 to 6 months) before taking any action on money decisions. The 3- to 6-month timeframe is a planning stage.

The next thing they need to do is to get organized and focused. They need to list the major life decisions theyll need to make in the next 5 years. Then they should list their assets and debts, and review their current insurance coverage.

During the 3- to 6-month planning stage, they should write out how theyre going to live during this stage. What will their expenses be? Where will they get their income during this time (and how much)? How long will this planning stage last?

Beyond the planning stage, they need to review their income for the following 12 months and beyond. They should plan out their taxes and what is leftover. They need to plan out what they want their life to look like in the next 5 years. (For example, where will you live? What will you do every day? What will you be involved in? How extravagant will your life become?) They need to ask themselves what future expenses are coming, such as college education, retirement, and really great trips. Plus, they need to plan for how much philanthropy they want to be involved in, for at least the next 5 years.

During the planning stage, a new millionaire will also want to find a financial advisor, accountant, and estate attorney (and perhaps a wealth psychologist). They can ask for referrals and then interview each professional to get a good idea of compatibility.

I know people who play the lottery regularly. I told them if they win to come talk to me and Ill give them some decision-making advice (without asking for handouts).

In addition, I've read that people who come into sudden money notice their phone ringing a lot more often, as people they don't even know find out about their new money, find their phone number, and start calling asking for investment money and handouts. (This is in addition to the family members and friends who start calling a lot more often.) This would be a good time to either drop the home phone number completely (even if that number has been the home number for years) or get a new home number. Likewise, getting new cell phone numbers would probably be a good idea. (Then only tell select people the new numbers.)

What about those friends and family you might lose if you come into sudden money? You know what? You cant control other peoples responses when you choose not to invest in their business ideas or give them loans or handouts. You have to make the best decisions you can with your new money and let the other chips fall where they may.

Ive realized that when Ive gone through difficult times, Ive found out who my real friends are. The same principle applies to sudden money. If you get it, you will know who your real friends are within one year.

If you ever find yourself the recipient of an influx of cash, keep your head on straight. Dont go to extremes. Give yourself quarterly reality checks. Expect that you are going to lose some friends and family members. And get advice from several qualified professional people regularly.

2005 Borgeson Consulting, Inc.