Just hours before the Spain's massive Christmas lottery draw takes place on Thursday (22 December), the Bank of Spain has issued a warning to those who have bought tickets, saying that many winners have lost everything and ended up far worse off because they didn’t know how to manage their prize money.
First, the Bank pointed out that prize money of more than 40,000 euros is taxable (smaller amounts are not), and it is important to bear that in mind.
Secondly, it referred to people who plan to pay off loans, buy a house or change their car if they win.
“If you are thinking of repaying a loan in its entirety, compare the cost of the remaining debt with the profit you could make from an investment to see which would be best,” the bank said.
If someone chooses to invest, it also recommends taking advice before contracting any products and, especially, about the possible risks or losses of capital which could occur. “Study the information carefully and don’t get carried away in the excitement of the first moment,” it said.
For anyone thinking of buying a car or a house with their winnings, the bank pointed out that there are costs involved in such ownership such as maintenance, insurance and taxes. “Those expenses are directly related to what you buy and they apply all the time you own it,” it explained.
And finally, the Bank of Spain stressed that this is money that winners did not previously have and it should be handled with care.
“It is normal to treat yourself to something, but don’t lose your head. If you think of the prize money as being as important as the money you earn from your work, you will avoid ending up in a compromising situation,” it said.