An Adelaide man last week walked away with the giant $150 million Powerball jackpot over the weekend.

But while the lucky Australian has been literally jumping for joy, according to gambling giant The Lott, he is now facing a long and often stressful journey.

After all, global research has shown that lotto winners are more likely to go bankrupt and there have been no shortage of horror stories from past winners. 

So, if you encounter a financial windfall like winning the lotto or a game show prize (or an unexpected inheritance or big payment you didn’t know was coming etc) what’s the best way to handle it, and how can you avoid mistakes?

First thing to buy

The first step is to go shopping, but perhaps not in the way you might think.

Instead of a new car or luxury holiday, the first thing you need to purchase is a financial adviser.

And you’ll want to make sure you make a good decision, because it could be one of the most important purchases you make as a newly found millionaire.

Ryan Watson, chief executive of Tribeca Financial, said that independent advice is the most important step towards setting yourself up for success, because everyone’s situation is unique.

“In winning such a large amount of money it can change every facet of your life. However, you want to be in control of this change, instead of it being in control of you,” Watson said.

“Your financial advice journey should begin with a significant goal-setting exercise, one that looks at where you want to be personally and professionally long term, then medium term,” Watson also explained.

“And then [address] what effective change you need to create now around your cash flow, investment and then contingency or risk management planning.”

Chartered accountant Marianna Agostino agreed that independent advice is the first step, with what’s best differing between people.

“They can help you to develop a plan in line with your personal situation, including generating an income stream versus paying down versus holding some cash,” Agostino said.

Financial adviser and On Your Own Two Feet founder Helen Baker agreed.

“There are pros and cons to each and the priorities will differ based on your age, financial situation and lifestyle goals,” Baker said.

Consider paying down debt

If you have any debts then thinking about paying them down, with the assistance of a qualified adviser, could be a “great option” to consider, Agostino explained.

But be careful, because debt is a good example of the pitfalls of proceeding into wealth without advice.

“Some debt is “good debt” and it can help to manage your tax position through deducting the interest,” Agostino said.

“Sometimes paying down debt can have an opportunity cost associated with it, e.g. generating a passive income stream that will pay the debt down over time.”

Tax time is all the time

One thing about being rich is that tax can have much larger implications for your finances.

Lotto winnings are tax free in Australia, but any returns you earn on the money you’ve won and then invested are not.

“You may choose to make some charitable donations which could be tax deductible – speaking to an adviser is helpful here,” Agostino said.

All information contained in this article is general in nature and should not be considered personal financial advice. It is not intended to influence the financial decisions of readers, who should always seek independent advice.