Recently I outed myself as an occasional lottery player and as a person who thinks that lotteries in and of themselves aren’t so bad.
I don’t think they’re good. Rather, I think they’re not-too-terrible in the way that potato chips are not-too-terrible. Enjoy a few every so often and you’ll likely be okay. Eat nothing but chips? Problem.
A number of readers admitted they sometimes buy in, too. But one responded in this way: “I wish the people who spend more than a dollar or two a year would put their money to a better use, such as donating to a soup kitchen or to the Salvation Army.
“Alternately, I wish they would save their money and put it in their emergency fund. Yes, I have bought a chai latte or two in a year, but at least I receive value for the money spent.” (emphasis added)
Here’s what I think about that:
- What makes you think lottery users don’t donate?
- What makes you think they don’t have EFs?
- What makes you think they don’t “receive value for the money spent” in terms of the amusement factor, the daydreams, the laugh with friends?
(I know some people have mega-problems with the Mega Millions, i.e., they have unrealistic expectations. I’ll get to that in a bit.)
I have an emergency fund, I continue to save for retirement and I donate to a lot of causes. But I don’t save or donate every dollar I earn. Neither does the commenter, apparently; some of his dollars go to things like chai lattes.
It’s the same with me: Some of the money I earn I spend on treats. Six or seven times a year, that treat is a pair of $1 lottery tickets — one state Lotto, one Mega Millions.
A preferred form of escapism
Plenty of writers, including J.D., think the lottery is an investment for fools. In that article he cited a couple of disturbing factoids:
- 30% of people without high-school degrees consider the lottery a wealth-building strategy.
- Households with income of less than $12,400 per year spend an average of 5% of their earnings on the lottery.
I’ve got nothing against J.D., even though I thought he’d be taller; the dude signs my paycheck, which I truly appreciate. But when writers use words like “fools” or “stupidity tax” (the latter is from my friend Liz Weston of MSN Money), they’re tarring with a highway-wide brush.
Personal finance sites are full of tips on the best ways to use the money you have. You don’t see blog posts about why you should never ever ever have any fun until your mortgage has been retired and every student loan is paid in full.
Instead, we tell people to use Groupons to go out to dinner or get a massage, or to dig up a rock-bottom airfare and a house swap for a week away. That’s not foolish, it’s frugal. That’s not stupid, it’s a smart use of available funds.
Well, suppose my preferred form of escapism is to buy one lottery ticket a week. If I can afford it, will $52 a year send me to PF purgatory?
Understand: In no way do I advocate overspending on lottery tickets, or on anything else if it breaks your budget. And yes, if you plan to retire on your winnings you are deluding yourself. The folks splitting the $560 billion Mega Millions kitty didn’t have to go to work the next day unless they wanted to — but millions of other ticket-buyers did.
A dollar and a dream?
A frequent criticism is that money spent on lottery tickets is “wasted.” To which I reply: Do you expect everything you do to provide some kind of financial return?
Personally, I think that cigars, spray-on tans, wine collections and designer handbags are wastes of money. But I don’t get to decide what you buy. If you want those things, then budget for them and enjoy them.
In fact, J.D. did acknowledge that the Mega Millions et al. can be harmless fun for some people. His real beef was with those “who view the lottery as a legitimate path to wealth.”
“Sadly, there are many such people,” he noted.
I agree that a reality check is needed. I feel the same way about young people who won’t even consider starting a Roth IRA or contributing to a 401(k) plan. That’s something they’ll do “later.” They don’t know or don’t care that compound interest really wants to be their friend right now.
We need better ways to approach finances. Better math skills wouldn’t hurt, either.
What we don’t need? Divisiveness. Most of us allot money for the things we want: opera tickets, comic books, amateur athletics, daffodil bulbs, power tools, a movie plus refreshments. People tend not to get tight-jawed about new soccer cleats or a summer blockbuster plus Raisinets, though. But suggest a quick-pick or a scratch-off and the Money Police descend — and declaim:
- The lottery is a tax on people who are bad at math.
- The lottery is a tax on poor people.
- The lottery is a self-imposed penalty on the stupid.
I think there’s a whiff of paternalism/classism in this. Certainly people who believe the lottery is a wealth-builder could do with a clearer idea of what the odds really mean. But if Joe Sixpack can afford to spend $52 a year on the lottery and enjoys doing so, why is that “stupid”?
Put another way: Some people spend a lot of money on rabid sports fandom or on spa treatments that involve molten wax and naughty bits. I personally have no interest in such things, yet I will defend to the death your right to paint team colors on your face or to cultivate a landing strip. (Ow. Even vicariously, that’s painful.)
That’s because it’s your money, not mine. You ought to be able to use some of it to buy a miter saw or attend a genre convention. Or to indulge in a dollar and a dream.
An entertaining fantasy
Incidentally, I didn’t win the Mega Millions. But you already knew that, because the odds are crap. If you want to know just how crap they are, check out the Mega Millions Lottery Simulator here on Get Rich Slowly.
Not-winning cost me one-sixth of the amount I might have spent on the first show of the day at a nearby movie theater (sans Raisinets). And I got two kinds of fun out of that dollar:
- “Somebody has to win. It almost certainly won’t be me…But suppose it is?” Segue to….
- “If I won, I’d consult a lawyer and an investment specialist. Then I’d pay off my relatives’ debts, put a new roof on my friend’s house, forgive all personal loans, set money aside for my nephews’ educations, and give a fecal ton of cash to all the charities and scholarship funds to which I can currently send only $30 at a time.”
Intellectually, I know that I’m not going to win. Psychologically? I smile every time I look at the ticket. I love thinking about what luxury it would be to pay cash for a reliable car for my daughter and son-in-law, or to add a bunch of zeroes to the next charity checks I write.
I have this financial fantasy six or seven times a year. It doesn’t affect my day-to-day money practices. But like any other nonessential expenditure — fresh pineapple, a magazine subscription, that box of Raisinets — it adds a small layer of enjoyment to my life. To me, that’s worth a dollar.
This article is about Odds and Ends
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