Personal Finance

Just Win The Lottery

I cringe every time I see surveys with results like this. In a survey conducted by the Consumer Federation of America and the Financial Planning Association, people were asked what was the most practical way to accumulate several hundred thousand dollars. While over half (55%) said saving a little each month over many years was the correct approach, 21% (that’s one out of every five people!) said the best way is through the lottery. Another 11% said that the best way was to inherit the money and 3% said getting a big insurance settlement was the way to accumulate the money

As might be expected, the poor chose the lottery method far above the wealthy. 38% of those with incomes under $25,000 chose the lottery as the best way to gain wealth while only 9% (that’s still one in 10) of those earning more than $75,000 said the lottery was the way to go. African Americans (30%) and those over the age of 65 (31%) also chose winning the lottery as the best method in higher numbers as opposed to saving each month.

It’s no wonder that so many people’s personal finances are in disarray when they feel the best chance of creating 6 figure wealth is through the lottery or means other than from their own work and saving. Considering the odds of winning the lottery are 18 to 120 times less than dieing from flesh eating bacteria, there are a lot of people fooling themselves. It also reflects on the poor job we are doing as a nation to educate people about personal finance.

A few other tidbits from the survey that made me cringe:

Only half of Americans understand the meaning of net worth and less than half know how much their net worth is.

Less than 10% of Americans believe they can save $1 million over a 30 year period.

The one positive result of all this? I don’t have to worry about the information from this journal or my main site becoming irrelevant any time soon…

7 thoughts on “Just Win The Lottery

  1. You would not believe how many people I try to dissuade from purchasing lottery tickets. I used to rock the cash register in a convenience store, and I’ve heard all stories. The most prevalent one, though, is “it only takes one ticket to win”. Like that has some profound meaning.

    My favorite one is when people have “theories”. One lady wouldn’t buy scratch-off tickets on even-numbered days. This one old man would constantly make a scene every time I’d scan the ticket at the cash register – he was sure I was checking whether the ticket was a winner, and selling him all the non-winners. He would demand that I sold him tickets without ringing them up.

    I went as far as quote the State “online” lottery odds to anyone who’d buy them – they’re like 1 in 47 just to get your $2 back. I’d give people actual figures of little money stashed away balooning up over the years …

    “I talk to the trees … But they never listen to me …”

  2. Unreal. I actually started my blog because some co-workers were starting a “Lottery Club” that would pool their money together and buy into whatever lottery had the highest payout that day or week. And these are well educated people making at least $60000 a year. I was amazed.

  3. thats one the silliest things I ever heard of. to actually think that’s the way to go.

    I’m hoping the survey is totally off.

    lottery club seems more like a fun thing to do, to dream together.. but I wouldn’t know. hey, at least most of those winners have been those lottery clubs deals, seems to work.

    for er, 1 out of millions. heh.

  4. Respectfully: Y’all are completely wrong.

    RS, you should be encouraging your co-workers to put as much money into the lottery as possible. That way, they’re paying more for your kid’s education.

    The more idiots that play the lottery –> the more tax revenue the state gets –> the less they have to take out of my paycheck.

    Also, another positive effect is that if they are putting their money into the lottery thinking it is an investment, then they are not adding to the stock of capital in the market. Less supply of capital –> higher rates of return. (also why I have half my money in the emerging markets)

    There is a confounding factor of course. More lottery –> less financially solvent individuals –> higher need for social safetynets.

    So it’s not all milk and honey, but if you want to play the lottery – go ahead.

  5. When I lived in Pennsylvania the lottery money went to fund Senior Citizen’s programs. Any money in the state budget that was to go to these programs was reduced by the amount the lottery profited. At the end of the day, the Seniors saw nothing more than they would have had anyway, and the governor and legislature then had a slush fund to spend on anything they wanted with essentially no accountability. Nasty stuff.

    That being said, I’ve been known to plop down $5 a couple of times a year. Harmless if treated as entertainment. After all, “it only takes one ticket to win” 😉

  6. These numbers are truly horrifying.

    But I confess, we have one of those office pools going. Whenever the bureaucracy we work for is impeding our work, we all start saying, “when we win the lottery, we’ll all walk out at once.” It’s a nice fantasy.

    Still, I spend $52/year on these $1/week fantasies. I’m sure one of you math wizards out there can tell me how much that would amount to in a 30-year career if it were invested instead.

    I would never spend $1/week on the lottery on my own, but I can’t stand the idea that if my officemates won I’d be the only one who still needed a paycheck.

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