(Image by Mark Ou via CC BY-SA 2.0 )
When I was a teenager and a college student, I bought lottery tickets often. To this day, I don’t know why.
I grew up in the South Bronx of New York City in the 1980s and 1990s. Maybe buying lottery tickets was a distraction from a hard life.
I think that buying lottery tickets for me was a form of escapism. It’s additively exciting.
The idea of buying a lottery ticket, and perhaps instantaneously and suddenly having your life changed for the better, appeals to many people.
It did to me.
I regularly bought lottery tickets through my college years. On the average, I would spend $20 or more every month on lottery tickets.
OK, $20 may not sound like a lot. However, when adjusting for inflation, $20 in 1994 is the equivalent of $34.71 in 2019.
I didn’t have a lot of money when I was a dumb college student with a part-time salary.
Only now, looking back, do I realize that I would have had a lot more money in my pocket if I hadn’t bought so many lottery tickets.
I once won $35 on a lottery ticket on a $5 lottery ticket. Instead of saving the money or buying something useful, I wasted it on a bunch of bootleg Shaw Brothers kung fu films on VHS tapes.
It was the 1990s, so I don’t know how to explain that last part.
Anyway, I like to write on this subject a lot because too many people self-sabotage their own personal finance ambitions by treating lottery tickets as if they were some self-appointed bill they have to pay.
The Odds Are Astronomically Stacked Against You
Your odds of winning a $350 million Powerball lottery is about 1-in-292 million.
Revenues from lottery ticket purchases generates over $80 billion in the United States.
Lottery organizers as well as state and local governments benefit the most from lotteries.
Working class individuals and families who regularly play the lottery are just wasting money that can be put to better use.
Buying multiple lottery tickets does not increase the odds of winning. This is especially true if you buy lottery tickets in different cities and states as they are all independently managed.
Winning the Lottery Doesn’t Mean You Can Keep it All
The state will tax your winnings by 24% at the minimum. This doesn’t even count city and local lottery taxes.
Beware of lottery office pools. Verbal contracts and non-notarized paper contracts are not legal binding.
You’ll spend a fortune in court trying to prove their validity depending on where you live.
Many office or workmate lottery pool agreements end up in court because the employee who cashes the ticket decides to keep it.
Better Ways to use Your Money
If you buy a $5 lottery ticket every week for three decades, then you will spend over $7,800.
Saving that money in a bank account or wisely investing it is a better use of that money.
That is what I say to people now when I say that lottery tickets are a waste of time.
I wish someone said that to me in 1994.
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Allen Francis was an academic advisor, librarian, and college adjunct for many years with no money, no financial literacy, and no responsibility when he had money. To him, the phrase “personal finance,” contains the power that anyone has to grow their own wealth. Allen is an advocate of best personal financial practices including focusing on your needs instead of your wants, asking for help when you need it, saving and investing in your own small business.