With last weeks Powerball getting as high as $314 million , before an Iowa woman won the huge amount, and last night's Mega Millions game garnering four winners in four states (dividing the $330 million prize), I thought I would take some time and discuss the lottery.
The allure of the lottery can be exciting, especially when you see such huge prizes. If I won, I could do a lot of things with that money. Get my bills paid off once and for all, build my emergency savings, even fund the start up of my new business, that I continuously dream about. However, there are problems with it.
The first and biggest thing is you have a better chance to be struck by lightening then to win the big prize. In fact, even the small prizes will almost never amount to more then what you spend to buy the tickets. If everyone won more then they spent, then the state (same goes for casino games) or whoever is putting on the lottery would not make any money. If they didn't make money, they would not offer the lottery.
A 1999 study by the Consumer Federation of America and Primerica found that many low and middle income workers thought that the lottery was their best hope of a retirement nest-egg. The odds of winning anything of consequence from a lottery is negligible. The odds of winning the Powerball jackpot drawing is one in 146,107,962. As your local gangster would advise, fuhgedaboutit.
- Albert Mohler
Saving, is a much better way to make your millions. Wealthy persons are not fueling lottery sales. Studies indicate that over 80-percent of all lottery tickets are bought by only 20-percent of purchasers -- and these buyers are, as described by an MSN report, disproportionately "low-income, minority men who have less than a college education."
Lottery and power ball will make me rich. Truth - Lottery and power ball are a tax on poor people.
- Dave Ramsey
Fact is if you save that money, over time you will come out ahead. For example the Tax Foundation reports,
A recent survey reported that 21 percent of respondents believe the lottery is a practical way to save for retirement, but Tax Foundation data show that they would fare better by investing in stocks than in lottery tickets. A person who spends $100 per month on the lottery—slightly less than the average Rhode Island resident’s lottery expenditures—could earn an additional $144,403 over 40 years by investing in stocks instead.
Of course, I don't know many people who spend $100 a month on the lottery, but at the same time I know there re some out there. Still though with compound interest put that $1 a day in to a savings account (preferably a money market account) and watch that money grow. Not only will you add a new dollar every day, but also the interest will earn interest on interest everyday. You will come out far more ahead in the end and be set to retire in 40 to 50 years. Especially, if you are wise and have a retirement savings in addition to this savings. If you will follow the 10 (Tithe/charity)-10(Savings)-80 (live on expenses) plan, you will retire rich. Of course some live on less and put more in savings and/or give more. The idea of the 10-10-80 plan is a minimum guideline.
Some persons justify their purchase of lottery tickets by claiming that they are playing merely for entertainment, and that they can easily afford a few lottery tickets a week. After all, as some explain, it's really no more expensive than going to a movie.
Well, that argument won't withstand scrutiny. You may be able to afford a few dollars a week as "entertainment," but you are buying into a system that only works by enticing those who cannot afford tickets to do so.
You can count on a banner headline when the winner is announced, and a new record jackpot is probably right around the corner. Remember these considerations when you see the happy winners. In the end, the lottery makes us all losers.
Finally, it highly unlikely that you will be a Powerball winner or a Mega Millions winner. So, it is better to save your money and watch it grow over time, rather then trying to get rich quick.
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