Undoubtedly you have heard about how the Mega Millions jackpot (as of October 17th) is now up to $868M, the 3rd largest grand prize in US history.
Or maybe you haven’t heard. Perhaps playing the lottery isn’t your cup of tea.
I honestly hadn’t heard about it until my lottery playing friend sent out a text in our friend group chat reminding us all to buy our tickets.
Nonetheless, people are currently flocking to gas stations, convenience stores and the like hoping to get lucky and cash in on that elusive winning ticket.
Likely fueled by the visions of what they would spend that money on, these people have no problem throwing their money, oftentimes boatloads of it, into the ring for their chance.
Never mind just how unlikely the odds are of actually winning, all they need is to get lucky and their problems will magically vanish as they become rich with all that money.
One thing people don’t consider though. There’s a way to get rich without playing the lottery at all.
It may be tough to believe, but the numbers don’t lie. Before we get into how it’s possible, let’s take a look at the lottery in general and who the typical lottery players are.
An Overview Of The Lottery
Lotteries in the United States began innocently enough. They essentially were used to help fund some of the early colonies and to help fund public works projects once the US was formed.
Lotteries quickly got a shady reputation as there were several scandals and they were denounced by religious groups. In fact, by 1890, lotteries were banned in nearly every state.
Eventually, state governments brought them back and now heavily regulate them in the modern age.
Surprisingly enough, the current lottery system is a solid generator of revenue for the states that participate in them (44 currently do). Like in the old days, these lotteries can help to fund certain programs like education, environmental activities, or just go into the state’s general fund.
While games such as the Mega Millions and Powerball generate most of the press, people often forget about the revenue generated by scratch off tickets and other instant game forms of the lottery.
Despite the infinitesimally small odds of winning the lottery (302,575,350 to 1 for this Mega Millions, you’re way more likely to be struck by lightning!), people still turn out in droves, especially when the jackpot prizes of the main games get large.
For the most part, these big jackpot events draw many one time participants. Throwing a few bucks towards a lottery once or twice a year isn’t going to kill your finances.
The real issue is with the people who play and gamble on the lottery much more consistently. Who are these people?
Who Actually Plays the Lottery?
Unfortunately, the people who play the lottery tend to be among the poorest in the nation.
Among the people who make less than $10,000 annually, they spend an average of $597 annually on lottery tickets.
That’s 6% of their income right there.
These people believe that because of their situation, the only way to get out of it and accumulate a significant amount of money is by winning the lottery.
They see it as hope, that maybe they will get lucky, despite knowing the extremely long odds. When you are desperate, this hope can be a dangerous thing, and further cause your financial situation to spiral.
People often will get addicted to the lottery and the instant games such as scratch off tickets. The instant gratification of knowing you have won is powerful.
The problem is, when you do win these instant games, it never seems like enough. Often times whatever amount people win from the scratch off, they will use to buy more tickets, always chasing after the elusive grand prize.
When I worked in a liquor store for a few months before starting my full time job, I saw many people fall prey to the lottery.
The store was located right outside the poorer part of town. Like clockwork, everyday there were several people who would come in and buy lottery tickets and scratch off tickets, along with a pack of cigarettes and sometimes booze.
Among these regulars, I never saw any of them ever walk out with any winnings in hand. $10-$20 was typically the minimum spent everyday.
The lottery can be a destructive habit and ruin many people’s lives.
If only these people only knew that by saving that money they could build a large stash, one capable of potentially getting them out of whatever financial situation they hope the lottery can save them from.
Get Rich by NOT Playing the Lottery
There is a much easier way that someone can get rich, by NOT playing the lottery.
Give up throwing your money towards the infinitesimally small chance of winning a large jackpot, and put it towards something that can growth your wealth and get you out of your tough situation.
Don’t believe it? The numbers don’t lie. Let’s take a look.
Take my friend for example, who told me he spends about $10/week on lottery tickets/scratch offs. He has an average income and can afford this, but he doesn’t realize the opportunity cost he is giving up by putting this towards the lottery.
What does $10/week turn into if you invest that over a 40 year period?
Assuming a 7% return that $10/ week or $520 a year will eventually turn into $114,500.
Will that make him rich? Well, rich is all relative. My friend is not a saver. In fact, I doubt he is saving much of anything for retirement at this point. If he does not turn this around, he may not have much saved up at all when he hits retirement.
In that case, this $115K would comparatively make him rich, as it would be a significant sum of money for retirement he otherwise would not have.
How about for those people from my liquor store days that played the lottery every day? Say they spent $10 every weekday, so $50/week (which could be low balling it if we’re honest) and had been doing so the past 40 years.
If they had been saving and investing that $50/week instead, at 7% return they’d have $572,509. Over half a million dollars! Talk about a jackpot!
$100K, or even $500K may not seem like “rich” to some people, but this kind of money is something that most of the poorest in America will never come close to seeing in their lives.
Will You Buy A Lottery Ticket?
Sometimes it’s the little things that people don’t think of that can make a big impact on your finances down the road.
While it’s much more beneficial to focus on the bigger expenses (like housing, transportation and food) and cutting those down, when you already have an extremely low income and expenses (like the poorest), every dollar needs to be accounted for and optimized.
While there may seem to be little hope, and the lottery provides an outlet for that, there are ways to take control of your situation without virtually throwing away that money.
For those in a better off situation financially, you may be able to afford those lottery tickets, but are they really providing you value? Is it really worth it for that far out chance?
Easy to say if you win, but can’t say I know anyone that has. Do you?
As I mentioned before, if you throw a buck or two each year at the lottery when the jackpot is at a high amount, it’s not going to affect your finances. Maybe it is worth it to you if you think you can get lucky, and hey you never know you just might!
If you do happen to go buy a ticket and win, just remember that YFK was the one to bring it to your attention 🙂
What are your thoughts on the lottery? Have you ever played? Do you think lotteries prey on the poorest people? Let me know your thoughts!