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Shutterstock_286553204It’s that time of year again. The Kentucky Derby is back, and people from all over the world are coming together to watch the race. It’s an exciting (and expensive) day. Ten racehorses were purchased for more than $300,000 just this year. In fact, one horse had a price tag of $3 million.

All of the owners certainly are hoping for the $2 million purse — and many of the viewers are hoping for their own payday. The Kentucky Derby, one of the biggest betting events of the year, drew a record $209.2 million in wagers in 2017. So, what if all those dreams of instant wealth come true?

With over 16.4 million people tuning in to watch the race last year, there’s no doubt that people enjoy the Kentucky Derby. It’s not only exciting to watch, but with people making financial wagers, it’s smart to think ahead on how you would spend any winnings, no matter how big or small.

I sat down with George Willie, CPA, CGMA to hear his tips on how to spend—or save—if you win.

Pay off your debts.

The top priority when you receive any extra cash should be to tackle your high-interest debt. “If you win a sizeable amount, it would be the perfect time to get rid of your debt,” Willie says. “I have seen winnings be used for many kinds of debts — buying a car, paying off your new house. This is a real life-changing time to do these things.” You’ll save yourself a lot of money by reducing the total interest paid if you put these debts first.

Reinvest

You’ll want your money to last, so look at investment options. “If it’s a significant amount of money, take it to a fixed income instrument and sit back and look at your earnings grow.”

But, Willie cautions, you should remove one option from consideration: “Do not reinvest at the track.”

Purchase a big-ticket item that you need.

An unexpected stack of cash can make a big difference. That means thinking about your long-term goals. Willie says “don’t purchase something that you want. Purchase something that you need. Whether that be a new house, a new car or something that can better your life, this is a time to make your life better and set yourself up for the future.”

Invest in the sport – but manage your risk.

“If you are passionate about the sport of racing, you can invest in a partnership and become a part owner. Doing this will allow you to be a part of the action without having too much exposure. You’d also be investing in your style. Attending these events allows you to join in the most fashionable day of the year,” says Willie.

Will you be watching the Kentucky Derby this year? Tell us your favorite part of the race in the comments below!

Elizabeth Rock, Associate Manager – Enterprise Social Media, Association of International Certified Professional Accountants

Originally published by AICPA.org