Why It’s Okay to Buy a Mega Millions Ticket (Even After You’ve Done the Math)
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.
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There are 154 comments to "Why It’s Okay to Buy a Mega Millions Ticket (Even After You’ve Done the Math)".
Buying a lottery ticket for $1 gets you a 1:174,000,000 chance to win, or $1/174,000,000 worth of economic value.
However, that dollar also buys you the right to dream about winning (your entertainment value), which might be worth very much more than $1…
A dream which costs money? I have a better alternative, free of cost dreaming which can benefit you. This is for Donna Freedman as well.
Go jogging in the park dreaming about finding a suitcase filled with cash. Go early morning-every day before any one else have it.
Cost = 0, Benefit = Infinity
prime example of having totally missed the point
I actually found a suitcase full of money once. Cash and a gun. Felt kind of funny, so we turned it in to the police. Unregistered gun to boot. So never say never….
Huh ? What’s an “unregistered” gun ? Do you live in the Soviet Union or New York City? If you knew how crooked cops really are you would have kept both ! I know..You felt like you were helping solve a crime.. LOL !!.
Well, you did say that households with incomes of less than $12K spend 5% of their income on lottery tickets. So saying that it’s a tax on the poor is a reasonably fair statement. I wouldn’t take away the lottery because I do think it keeps some people going…the dream of a big windfall like that. But, as the aforementioned 5% of income attests, there is a little problem here. And I think the solution to this is education (education is the answer to so many things!). The lottery is fine and can be played by all on occasion because it is fun to dream like that, but you simply must admit that it is a tax on the poor, so to say, and better education on what they can better do with that 5% of their income would be a nice solution.
Most poor people don’t need education to tell them the lottery is a (really) long shot. They’re just desperate and feel like they have no other choice. The lottery is their 3-point attempt from half court at the buzzer because they can’t pay the bills anyway on $8000 a year.
The lottery is literally a ticket to dream of the possibility of having wealth; it’s popular with poor people because for many of them, this is the only dream they have.
It would be easy here to go off on a largely useless side discussion about whether or not the poor could/would improve their lot by implementing personal finance strategies such as those on GRS, given their limited income and resources (and often, education). My point is simply that the middle class and wealthy not only dream of winning the lottery, but also of paying off the mortgage and retiring and other forms of financial independence, whereas the poor have only the dream of winning the lottery and no sense of any other kind of financial freedom.
I agree that no one, rich or poor, should spend money they don’t have on the lottery. But I also agree that the occasional $1 doesn’t cause harm. Would I take away someone’s only dream? No. (Would I offer them personal finance tips and advice? Yes, but only if I encounter them and they listen.)
I agree with Laura. Especially for GRS readers, we’ve all got our own “unique” budgets and stay on track for our own financial goals. But reading this article struck me like a simple but effective “motivational” tool. Odds surely are not on your favor for every lottery, but just the positive gesture and that “daydreaming” can actually pull you up even more and push you harder in pursuing your goals.
-Anthony
Or just a social thing, the way more well-to-do people might go out for a $50 dinner with friends every week or two.
Most of the people I know who play, do it in pools of friends or coworkers, or only on big-winnings days when lots of people are buying tickets. Buying for our work pool, every once in a while I’d end up in line next to some poor desperate gambler joking about how it was his retirement money on the line, but even then our work pool (about 25 people) invisibly outnumbered that guy.
I don’t buy this explanation for one minute. People at any income level that spend 5% of their income on the lottery aren’t “desperate” with “no other choice,” they’re irresponsible. And don’t forget that anyone who only makes $12,000 per year is only able to afford $600+ in lottery tickets because your tax dollars are likely paying for their food and subsidizing their rent.
Don’t forget that folks who work for minimum wage are subsidizing your restaurant meals, clean floors, processed foods, etc. Life in society is a two way street. If we paid folks a living wage such that they wouldn’t need a social safety net, goods and services would be much more expensive.
Quote from Caddyshack: “Danny, This isn’t Russia. Is this Russia? This isn’t Russia is it?”
I think it is a little bit of a stretch saying people who work minimum wage subsidize our lifestyle, usually it is a series of choices that leads some to minimum wage jobs (I hope this doesn’t sound too high and mighty).
For those reading this blog, playing the lottery probably is some harmless entertainment, but I do have issue with a state run lottery that does seem to hurt many families in poverty. One report showed that some poor families spent 9% of their income on lottery tickets: http://stoppredatorygambling.org/category/research-center/lotteries-who-really-plays/
When money is going to the lottery instead of buying a family’s next meal we all pay. In a free country it is a choice, but I wish it was a choice that private enterprises made us pay instead of marketed heavily and encouraged by the government.
The danger in an article like this on a very popular blog is that it can give justification for some who play and shouldn’t by saying it is just their entertainment dollars being spent (I know that’s not what the article said, but I don’t think it is too much of a stretch for someone to reach that conclusion).
Education on the pitfalls of the lottery is unlikely to occur in states (such as Masschusetts) where lottery proceeds are specifically earmarked for educational aid to cities and towns. Politicians don’t want to kill this particular golden goose, as it allows them the luxury of not having to take a stand on how to pay for our schools.
That being said, it’s not a tax. It’s a cynical marketing scheme that comes close to being a fraud, but no one is required to participate, no matter what their income level may be.
Hey Andrew-
Clarification — I agree that it’s not a technical tax because no one is required to participate , that’s why I was careful to put little modifiers by my thoughts on that. I agree with you though, man, I can’t see any state promoting education on the issue, they get way too much revenue from it!
I also fantasize, though I haven’t bought a ticket in a while, I used to use lottery tickets to reward myself as follows:
– A scratch-off ticket at the time cost $4. A one-way transit ticket was $2. If I walked home from work (50 minutes, with 20 of it up a steep hill) three times a week, I bought a ticket. I never won more than $10, but I did lose 20 lbs.
I also think that it’s a good way to think about priorities. If those are the things that I’d do if I had more money, is there anything I can be doing right now (other than making/saving more) to change my life so I’m getting/doing some of those things right now? (e.g. I’d donate some money to Daily Bread – have I made the one I _meant_ to send this year, or did I forget again?)
Ditto that. Spending $1 is a cheap way to put yourself through the motions of “If I had a fecal ton, I’d…” . Examining the outcome of that statement should remind you of what your day to day and even lifetime spending priorities are. Things you should align your dollars with even if, excuse me when, your Mega Millions ship doesn’t show up at port.
Very interesting point about the classicism though. Not something I’d considered. Are we too quick to count the decisions of the poor as ‘stupid’? When we would make those same decisions. Hmmmm…
Love the idea of reminding yourself of your priorities. Once, I wrote down all of my “if I had a million dollars, I would …” goals. Then, I went through and looked at how many of them I could actually do RIGHT NOW.
It turned out about 2/3 of them were either do-able, or I could approximate some version of them, with the money I already have — a modest but decent income.
Great point about dismissing the decisions of the poor as ‘stupid’. It certainly is a technique that allows us to feel good about ourselves and not feel guilt or pity. “They must be deserving to suffer so much …”
It’s known as the ‘just-world fallacy’ in logic and philosophy — the idea that if someone is suffering, they probably deserve it, because after all, “People get what they deserve in this world, which is just.”
Agreed, and I think this is what every lottery player should do, because that’s the ultimate value… it can help you open up your mind to what is possible in the here and now… and in some ways it’s even better because you can get many of those things without the headaches and misfortunes that affect some lottery winners.
I really enjoyed this article, I think some people do have that knee-jerk reaction when they hear someone spent money on the lottery and feel the need to spout off with the statistics. Thanks for writing this!
I think your theory is good, if someone who can afford it only spends $52 per year. The problem is, I don’t think most people who play the lottery can afford it. I also don’t think most people who play the lottery stop at $52 per year. It’s a slippery slope in my opinion and one that leaves you wanting to spend more and more and more until you win. I think it’s more dangerous than you are pointing out. I’ve seen friends who are broke spend a lot of money this way. I’ve also lost a lot of money gambling (not in the lottery) but at a casino. It was hard not to keep going and spend more.
Great post, very unusual for this site, but in a good way. I work in an environment with a lot of extremely educated and high earning people. For years now, when the powerball gets over a certain figure, someone in my office starts a pool, and people chip in $1 to buy group lottery tickets. It palpably changes the atmosphere in the office, gets people laughing and talking, etc. We’re talking about 4 times a year. Occasionally, we win $5 or so, and when that happens, we do, in fact, donate it. That’s pretty cheap fun and socializing in my book. I can appreciate this perspective.
^^This^^
I used to work for a financial services company, where I had many well-educated coworkers (grads from prestigious schools, many who went on to MBAs, etc.). These people probably know more than most about the odds of winning, but guess what? They all pooled in a few bucks to buy some tickets for the BIG Mega Millions. They didn’t win, but it was still fun for everyone involved.
I bought three tickets and spent quite a few hours thinking about what I’d do. It was fun escapism – I checked out homes for sale in London, I looked at itineraries for some fun trips to Australia, and just had a ball thinking “what if?” The last few weeks have been rough for me, so it was way fun to think about what I’d do if I won – even though I had a snowball’s chance in hell of winning.
http://traderjoesreviewer.blogspot.com
Maybe buying a lottery ticket is the easiest way to jump-start that kind of thinking. But it’s certainly not required. I have a huge bucket-list of things I’d like to do one day. I also tend to think of opportunities in terms of “why not?” instead of “why?”
Most of the “what-ifs” you can come up with when thinking of winning the lottery, are things you could do now, though perhaps a bit scaled back. Buying a mansion…how about a decent rural house that needs a little TLC? Donate millions to charity…how about $50 and some of your time? Brand new Lexus…how about a 5yr old reliable Camry?
And Australia…definitely doable without winning a lottery. We’re a family of four, with one person working part-time. This time last year we were watching the Northern Lights; today I think we’ll go pet some kangaroos.
“30% of people without high-school degrees consider the lottery a wealth-building strategy”
I wasn’t aware high schools issued degrees.
I wasn’t aware they don’t issue them, but English isn’t my native language. Does it matter anyway? It’s high school! We all know what that means. 😀
Why you reply on behalf of J.D dear?
Donna was referring to the lines written by J.D.
Are you J.D ???
Whew! You’re obviously a little upset about people that bash the lottery.
Well, most of those things you mention that people spend money on are tangible items they get to use and enjoy.
It’s not some fairy-tale they create in their imagination on what they’re going to be able to do with the money “if” they win.
I can make up that same fairy-tale in my head without actually wasting the money to buy the lottery ticket. Odds are, we’re both going to end up in the same spot and I just saved $1!
1 in 21,000,000,000 says all I need to know about playing the lottery.
The chance of me getting to use Groupon or taking my flight on my “rock-bottom airfare” is 1 in 1.
I don’t know about you but I prefer my odds in the 2nd scenario.
It’s funny that you emphasize tangible things, when so often on this and other personal finance sites, the contributors talk about paying for experiences. Sometimes an experience is new climbing shoes that let you go out and climb. Sometimes it’s a ticket to a musical or opera or movie, and after it’s over all you have left are your impressions of the performance.
I agree that as any sort of practical or money making strategy, the lottery is painfully stupid, and I do think the author of this piece downplayed the significance of the number of people without high school diplomas, making significantly less than the poverty level, spending large percentages of their incomes on what amounts to basically a short, fun experience while expecting to actually strike it rich.
But some people enjoy the experience as entertainment, and if they’re aware that the odds of them winning big are infinitesimally low, why is that any worse than paying for another experience that, in the end, leaves you with nothing tangible, just your memories and impressions? I don’t gamble, personally, but I do occasionally go out for drinks or even coffee with friends sometimes, or go to performances. I can make a drink or coffee that fits my tastes better than most bartenders/baristas can for less, so I’m paying for atmosphere and experience–a cozy place to catch up with friends and not worry about dishes or getting everything ready or tidying up before they come over–not a tangible object. I could think about all the things I’m provoked to consider after watching a particularly moving performance, but I probably wouldn’t unless I went. These things are in my budget as entertainment, and some self-described frugal people would probably turn up their noses at the expenditures. But if someone enjoys an activity you don’t and ultimately spends wisely, what’s wrong with that?
Cass, I think WorkSaveLive’s point is that you can have the same experience of dreaming about what you’d do with a ton of money whether you actually pay to play the lottery or not. Since you are pretty much guaranteed not to win anyway, save the money! This would be akin to other frugal experience advice such as why pay $500 for a hotel when you can pay $250 or couch-surf or whatever. Or why pay $1,000 for your flight when you can cash in points. Etc.
If that works for you, it works for you. (It does work for me, apparently; or at least personally I see no reason to gamble or play the lottery and I get my adrenaline elsewhere).
But I guess my point is twofold–first, some people might not do that. In theory they could, but they just wouldn’t or wouldn’t take the exercise as seriously that way or get the same thing out of it, in the same way in my example above that just thinking about one of my favorite plays or rereading it, that maybe I’ve already seen performed before, or going to a free performance by high school students, still wouldn’t bring me to experience the play in the same way and think about it with the same depth and in the same light as if I went to a performance by better actors. There is something about actually doing that changes the way I think about things afterward.
Likewise, eating out occasionally might not make any sense at all from a strictly rational point of view, unless you are actually incapable of making the dish in question. Or going to a live concert of a musician whose album you already own. Or owning the album at all, when you can listen to it on spotify. Or buying your favorite author’s new book instead of getting it at the library and then taking it back. Or, yes, spending the night in a nice hotel you can afford (and budgeted for) even though a cheaper option does exist. I personally value some of those experiences, though not all of them. To me, spending on the some of them is a waste, and spending on others gives me something I enjoy. You might be the opposite in which ones you value. Human psychology is a funny thing, but I’ve learned over time that the strictly logical (despite my being generally practical and rational to the point of friends joking about my robot-hood) is not always perfect for making decisions about what will make us happy.
The other is that some people like the small thrill of thinking they could win, even though they know they won’t. That thrill is, for some people, worth a couple bucks every once in a while. It’s not to me, but other things are that people who play the lottery but generally consider themselves frugal might not get the reason for at all.
I guess if it’s in the context of a working budget and if the person involved can afford it, I don’t see any reason why “wasting” a small amount of money on an enjoyable experience is a bad thing.
I used to buy one a couple times a year when I lived in Georgia. Why? Because I went to college for free on the HOPE scholarship, paid for entirely by lottery funds. It felt like paying it forward, just a tiny bit, with the added bonus that you might win a little.
Thanks! That is what I point out to folks who say the money is wasted or that it would be better spent somewhere else. I tell them, it already is!
“All Georgia Lottery profits go to pay for specific educational programs including Georgia’s HOPE Scholarship Program and Georgia’s Pre-K Program.”
Source: http://www.megamillions.com/winners/winner.asp?bioID=152602F5-0334-48EE-9044-898504C16B25&startItem=1
Donna, the HOPE Scholarship is the primary reason the lottery is sometimes referred to as a “stupidity tax” or “tax on the poor” in Georgia. People who buy lottery tickets tend to be from lower economic classes, and the funds go largely to this scholarship program. They say the program disproportionately benefits students from affluent school districts because they meet the GPA threshhold in greater numbers. (As it is, Georgia public schools (on the whole) are near the worst in the country.) Thus, the money is getting redistributed from typically poorer residents to typically less poor residents.
As a separate but related matter, there have been lots of complaints of grade inflation in Georgia high schools because teachers get pressure from parents and/or do not want to be responsible for holding a student back from the HOPE scholarship. In the last several years, I’ve read that more than half of Georgia’s high school graduates qualify (3.0 GPA) — yes, more than half are graded “above average” — and about 58% of HOPE recipients end up leaving or failing out of college before hitting 30 credit hours.
You addressed your comment to me but I didn’t bring up the HOPE scholarship. I don’t know enough about the public education system in Georgia to comment on that.
What I can say is that if you’re from a lower-income family there could be a whole BUNCH of reasons you drop out or fail.
I’d suggest reading “Lives on the Boundary,” by Michael Rose — a former lower-income guy who was fortunate enough to be noticed and mentored by a dedicated teacher. Rose earned scholarships and had the chance to do post-graduate work at Stanford, but ultimately decided to work with people who were in the same situation he’d once faced. He has some interesting observations about our the U.S. education system.
Sorry, I guess my post wasn’t clear. Donna, I addressed it to you precisely because I thought you had not heard of the HOPE scholarship, and I wanted to shed a bit of light on the issue more specific to Georgia. And it’s not that more than half of poor recipients leave college, it’s that more than half of all recipients leave college before finishing one years’ worth of credits. My second paragraph was not meant to comment on the lottery, but just that the scholarship program in Georgia being funded by it has its own implementation issues. I’m actually neutral on the lottery in general and tend to agree with your original post. And I always look forward to your posts because I love your writing style! Thanks for another good one!
Haven’t read the book, but when my sister was a teacher at a K-12 school near coastal Oregon, she helped get scholarships for kids who were the first in their family to go to college. Most of them went one or two quarters, then returned home. It wasn’t the classes or the work–it was the loneliness, lack of support system, not fitting in, and cultural issues that they couldn’t overcome.
Hey Donna,
I agree entirely.
My way of looking at it isn’t fun, nor is it a fundamental part of my wealth strategy, but I buy just one ticket, the minimum to be in the draw at all. Then at least I have given myself a chance.
It’s not fun. I don’t chase the numbers or watch to see if I’ve won. I automate my involvement (easy to do these days), set it and forget it.
Once you start buying more than the absolute minimum to enter, then you are playing the odds and that is what I think is crazy. It makes no difference if the odds are a million to 1 or 100 million to one, just let me have the minimum entry so that that really unlikely event could happen for me.
If it does, then, who was the smarty pants? If not, I wasn’t expecting, or even hoping (… or even spending any time at all apart from when I set it up in the first place, and OK, when I just read your post …) thinking about it anyway.
great post btw 😉
take care & best wishes,
Alan
That sounds like a bad habit. Every dollar you spend on the lottery comes back to you as less than 50 cents, on average (if you played for a million million years). Without the extra benefit of dreaming, discussing with friends and/or coworkers, etc you are just wasting 50 of your cents every time.
If someone has money in their entertainment or “fun money” budget to spend, who is anyone else to judge how they spend it? Is my $8 ticket to a movie, which buys me 2 hours of fantasy and escapism and entertainment any better or smarter than someone else’s $8 spent on lottery tickets that provide escapism and fantasy and entertainment to them?
One person’s chai latte (why don’t you make your own at home and donate the different, or better yet, drink water and donate even more?) is another’s lottery ticket.
If a person is spending money they don’t have on the lottery, that is, of course, an issue. But it is no more an issue than them spending money they don’t have on a movie or chai latte. It isn’t the lottery that is stupid; it’s the spending of money on things you can’t really afford.
Judging how others spend their entertainment money, simply because it’s on something we don’t value, is pretty egocentric.
So well said! People are so quick to judge others when we all, even underearners, are entitled to have some “blow” money. Not every dollar can or should be for necessities or charity alone. A friend of mine and her husband love dining out and probably spend $150+ three times a month doing so. We don’t place high value on dining out but we do go to Vegas sometimes because gambling is fun entertainment for us. To each their own!
I agree. It’s important to do what matters to us individually. I try to make the best decisions for myself and hope others do the same.
I agree that spending a dollar on the lottery here and there isn’t a big deal. But I think you could have explained why in about 2 sentences.
Unfortunately a lot of the very poor people I work with (and friends scraping by) end up buying a ticket when they’re in a really dire situation – can’t pay the phone bill, etc. Of course that’s the worst time to do it, but the lottery preys on people’s desperation, that’s why people who make under $12k spend 5% of their income on it.
fun post! i admit i went out and bought three tickets from our change jar/household petty cash when it was up to 640 mil- one with my husbands and my birthdays, one with our wedding date and one random one. it was a very rare expenditure, and we had fun that night talking about what we’d do with all the money. $3 for a nights worth of entertainment in a big city is fine, great even.
fwiw we’re doing ok-not-great, husband is gainfully employed, i’m freelancing and things are slow, but we can buy dinner and pay rent at the end of the day. buying a ticket wasn’t going to ruin us, but it isn’t something we should do often.
the next day when i went into the petty cash to run to the store, i saw where the three missing dollars were and was quite glad i hadn’t spent more 🙂 it was fun to daydream, but i also need those dollars for just straight up food.
The difference between a tax (on the poor) and purchasing lottery tickets is choice. The comparison ends there.
So would a luxury tax or sin tax on certain items not be a tax because it is an individual’s choice to buy those items?
@Andy: My thought is yes and my example is alcohol or cigerettes…you don’t NEED either of them and people who want them should pay more (ie, a tax).
Personally, I think all taxes should be a choice – I don’t have kids (or want them), so I shouldn’t have to pay school taxes. If you rent, you don’t pay homeowner’s taxes, etc.
Megan,
Interesting post on taxes. Do you feel like there are any items that are a public good that we should all have to pay taxes for?
If your rent you still pay homeowner’s (property taxes.) Your landlord has to pay them (and around here rental properties are taxed at a higher rate than homestead properties) and your landlord passes the cost of the taxes to you via your rent.
I really enjoy buying lottery tickets, it is probably my largest guilty pleasure. I don’t usually buy the huge jackpot draws though. Ever since I was a kid and the adult family members would let me scratch their tickets I have been a fan of scratch tickets.
My purchases of them are rarer now but when I do I still get that excitement, more excitement than I could get from spending the $4 any other way.
But I know going in that if I win anything it will probably only cover the cost of the ticket. The problem is when people expect to win, or can’t afford to lose, like you have said.
Thank you! I am so tired of people’s holier-than-thou attitudes. It’s gotten to the point where I can’t even read comments about frugal weddings (“We grew our own grass and cobbled our own shoes.”). Stop judging others.
Lottery tickets are harmless fun- so are comic books.
After all, the odds of being bitten by a radioactive spider so you can become a superhero are extremely tiny – but it sure is nice to daydream!
I agree. There are a lot of bloggers and commenters who point out how “stupid” other people are when they pay for things like alcohol, vacations, etc. Why pay for a flight and a hotel when you can drive to the beach? It’s all just sand and water!
But for me, I like the experience of trying a new wine, or getting on a plane to go somewhere new, or a nice (still frugal) wedding. These are things that I can afford and for which I budget. Does it mean that it will take several more years to be financially independent? Sure! But I love my job (biomedical scientist), so it’s a win-win.
If it’s conscious spending, then it’s fine by me. And for people who don’t drink, or go on vacation, or watch sports, or go to the movies, etc….good for you that you can be happy with relatively little. But I wonder if you’re sacrificing real pleasure for the expense of financial independence. I’m sure some are truly happy living with no “unnecessary expenses,” but the path to financial independence for me will involve cutting expenses viciously on things I don’t love (cable tv, iPhone, drinking at bars, etc.), and spending lavishly on things I do love (hockey, vacations, concerts). It’s more about figuring out what truly makes you happy than it is about getting to financial independence as quickly as possible.
Agreed! I really don’t like the attitude of some PF blogs, which seems to be “If you do anything fun, then you’re stupid.” As long as people budget for the occasional night out/vacation/whatever floats their boat, who cares?
Okay, I agree with most of this except with the “stop judging others” part.
I say let them judge– who cares? People make judgments all the time, it’s part of being human and having the capacity to evaluate things.
And if someone judges you in an annoying or offensive way then it’s just a chance for you to retort with a judgment or insult of your own. Funnn!! 😀
I bought a ticket to the latest Mega Millions drawing because the jackpot actually got big enough that the odds were mathematically in my favor to do so. Yes, I realize my chances of winning are still virtually nothing, but the payout was actually big enough to support the risk, which is very rare.
I’m no mathematician, but when jackpots get that big, there are more players. So, your odds of winning the jackpot alone are smaller, and the chances that you’ll have to split it are greater. I wonder what the optimal jackpot is with that factored in.
Exactly Matt. I wondered this too. It’s the media.
Read an article written by a statistician that, when the smaller prizes, odds of splitting the jackpot, and taxes are figured in, the Expected Value of a $1 ticket is greater than $1 when the jackpot is above $330M.
Also read that buying a second ticket doesn’t appreciably increase your odds of winning, but buying a second ticket *with the same numbers* means you’d double your share of the prize pool if there were multiple winners with your numbers, and is the smarter move mathematically.
Very interesting. That answers it. Never thought of buying the same ticket twice.
Do you have a link to the article with the analysis that shows $330 million or more is a mathematically sound play? I have seen multiple references but not found the article itself.
It would also seem important not to select numbers below 12 (the months) or 31 (the days) since so many people select birthdates that you’d have an increased chance of having to split the prize.
So, since any combo of numbers is equally likely, choose a combo least likely to be duplicated by others (avoid numbers that comprise birthdates).
Lotto tickets are an entertainment – the best entertainment, in fact, because what other forms can give you a small-but-real chance of striking it big? 😉 I see it in the same vein as a latte or a piece of chocolate. It won’t break my budget, and it’s fun to enjoy/”consume” the enjoyment for a few hours or days (until I find that that I am, alas, not a lotto winner).
Up until last year I had never played the lottery before because 1. I was raised that gambling was a sin and 2. I am a professional statistician.
Although I no longer thought that it was morally wrong to gamble, I never had any desire to play the lotto. Then one day two of my friends and I were out and they found out I had never purchased a single lotto ticket or scratch off in my life. We proceeded to spend about an hour buying a scratch-off, cashing in the winnings, and using our profit to buy a couple more tickets. We ended up breaking even and it was one of the most fun hours I have spent goofing off with my friends since I was a teenager.
Long story short, playing the lottery is no doubt a legitimate and fun form of entertainment 🙂
My coworkers and I have a weekly lottery pool, and it’s all in good fun. We each contribute $2 every week. We’re all aware of the astronomical odds against us one of us even has a stats background), but it does really lighten the mood in the office. It’s fun to joke about the whole department quitting at the drop of a hat, what we’d do with all the money, who we’d take on a vacation with us, etc. It’s pretty cheap fun, as far as I’m concerned.
I agree that the lottery is harmless when you can afford it. A few bucks for a little hope and fun is ok. It’s the folks who think of it as a wealth-building strategy that are in trouble. And some people really do think that way! My mom was a foster parent when I was growing up, and there was one little girl who came home from school with a “what do you want to be when you grow up?” assignment. She was planning to collect welfare and play the lottery. Not kidding! If that seems like a legitimate plan at age 10, then that 30% stat isn’t surprising 🙁 Sure they know winning the lottery is a long shot, but I think the problem is that they don’t see other, better opporunities.
I think lotteries are fine, just have a bit of an issue with governments being in the business of gambling.
Our economy is based on gambling, so let the people gamble. I’ve seen data recently that suggests it isn’t mainly poor people doing it.
I agree about the government running the lottery. It’s nails on a chalkboard when people say casinos will bring in money for the state: money from where? From people that would have either saved that money or spent it on something else! So, either the banks have less capital to lend out (higher interest rates), or other businesses lose revenue, because instead of buying his nephew the new Xbox, Uncle Joe blew his money at JackFox Casino! Then Uncle Joe needs help from the state to pay his bills, etc.
In sum, government-run gambling is bad for the economy. It just gives the state more money to blow on other stupid ideas. Let people keep their own money. If a lottery can be created in the free market, then so be it. They can all compete. When it’s run by the government, it’s a monopoly, and takes money away from everyone.
I’m not judging what anyone spends their money on, but I’ve never understood the “entertainment” value of lottery tickets. Isn’t the fun of dreaming what you’d do if you won cancelled out by the disappointment when you don’t? Yes, realistically you know you’re not going to win, but I guess the fun is supposed to be the slight hope that you will. Dashed hopes doesn’t sound like fun to me. But it’s your money, do what you want.
(I’ve never bought a lottery ticket but I’ve been given a few as gifts.)
Its commented on later. Having the “what if” conversations I would consider entertainment. If you don’t have a lottery ticket, then its not nearly as fun because with a lottery ticket you are buying the dream.
I lose a dollar. My disappointment is minimal.
Maybe, but who gets more enjoyment? A person who can smile and dream about living on a paradise beach for the rest of their lives or a person who says “well, I saved a dollar”.
The way I see it, since you were dreaming about winning big, you’ve really lost millions when you don’t win. Okay, maybe that’s a big exaggeration, but I still don’t see paying anything just to be disappointed.
True. But I still enjoy the fantasy. I can watch a movie about heroes and daydream about doing something truly heroic. I may never get the chance. If I don’t? I can stand up under the disappointment.
If you feel like you lost millions when you don’t win the lottery, then you definitely shouldn’t be playing the lottery.
I find it more annoying to pay for something that I am disappointed with but had real expectations of enjoying. Wasted plenty of money on lousy movies, meals, haircuts, etc. I have a hard time believing that most lottery players actually believe they will win and suffer true disappointment when they don’t.
When I saw that today’s post was by Donna Freedman, I lit up a little bit; hers have been my favorites of late.
The landing strip comment cemented it. I’m going to be laughing all day. Thanks Donna! 🙂
That line provided my first smile of the day, too!
@Ely and @Amy: You’re welcome.
Everything in moderation. There is a lot of judgment of how other people spend their money. The people I know who buy tickets do it for the entertainment/daydream factor, and it’s typically less than a latte or a pair of shoes or a movie.
the problem is when people who can’t afford it use it as a form of sanctioned gambling. Maybe some of the lottery money can be used for personal finance classes or addiction counseling for those adversely impacted? But who is going to make that call?
Some of the proceeds are used for gambling addictions. The Lotto also has a help-line available for those struggling with the addiction that leads them to these services.
The only time I play the lottery is when some clown in my department at work does a group buy on. Because if I don’t buy, these jerks will be the ones that win and I’ll be stuck behind as life has it out for me. And then I’d have to kill myself (or them) knowing they all retired as millionaires and I’m stuck doing the work of 10 people because I was too cheap to put in a dollar that week.
So I guess it’s sort of life insurance for me. Fortunately, this extortion costs less than $20 a year. And I suppose I do get $20 a year worth of day dreaming from those times I’m forced to buy of “what if”.
Thank you for putting into words what I have felt about this all along. I do have an EF, I do have an IRA and a 401k, I am paying off my debt and donating each month. This is a once every few months form of entertainment.
We were at my parents for dinner the Thursday before the draw and we each had pitched in a dollar for a ticket. The conversation about what we would do, how we would do it and who would want to be part of our joy lasted for a over an hour and then random thoughts would make me smile over the next two days (I always forget to check the ticket till a day after) I’m not planning on the money, I just like getting that chance to feel “what if…”
Eh – I am ok with someone buying a lottery ticket. One thing someone with a lottery ticket has vs. someone who doesn’t, is the ability to dream of what they would do with the millions of dollars they have .00001% of winning. The guy without the lottery ticket can’t have that dream. So dream on dreamers.
One thing I find funny is how people go nuts and buy a ton of tickets if the payout is beyond say 100 million or so vs when its under that. Its like “eh, 20 million dollars isn’t life changing, but 100 million.. now that’s life changing!!! GIVE ME 20 ticket!” Plus if you figure more people buy tickets when the payout goes up, then its almost a wash because a greater chance you will have to share your winnings due to all the tickets sold.
You know someone is a personal finance nerd when they’ve figured out the future value of their current income vs. the net winnings after taxes & the minimum shared amount to prevent family feuds, and only play when it gets above that number.
My boyfriend has a minimum number to win before he’d quit his job, so I used to buy him a ticket when the jackpot hit that number. But they raised the ticket price to $2 recently and it turns out that’s above my entertainment value price point.
I’ve never bought a lottery ticket, but I did spend a year buying virtual points for virtual items on a virtual games site, and my husband buys guns and ammo to go shoot at bottles for hours on end, and my sister buys every Disney movie on DVD even though she knows it will be obsolete some day, so I completely understand that what is entertainment to one person is a waste of money to others.
I loved having the “what if” conversations with my husband, with my sister, with my coworkers, with my friends on Facebook. It’s a great time to reflect on your life and get real insight into those that are close to you. Because even though the vast majority of us will never receive a huge windfall, I’d like to think that most of us will one day be able to retire with a large enough nest egg to live off comfortably, enjoy life to its fullest, treat the ones we love, and donate to worthy causes. All of these, in the very many varieties we discussed, is really what everybody seems to want. You don’t need vast millions to accomplish those things. You do, however, need to Get Rich Slowly. 🙂
Having the “what if” conversations could even be considered entertainment. So maybe a lottery ticket purchase can be considered entertainment?
Yes, that’s essentially what I was saying. But personally, I didn’t have to “pay to play” because I got entertainment value without buying any tickets, just being swept up in lotto fever along with the rest of the nation. I didn’t even want to win, as I don’t think that much money would bring me happiness. You know what they say… mo’ money, mo’ problems!
Sarcasm alert: I have a great idea for a new blog – Get Rich Quickly. In today’s society, everyone is entitled to their opinions. (Note – opinions – not actions than can hurt others.) Now, it may be a tad unethical if it was assumed that the site would encourage what some people consider rash behavior but it might also be a refreshing change to hear about people’s dreams that aren’t all so logical.
Donna – How come the previous comments from this post don’t carry over?
Not sure what you mean by “carrying over” — ???? Maybe it didn’t post right away? Try refreshing the page.
I agree whole-heartedly with everything in this article. The lottery should be seen as an expense for entertainment. I only buy when the jackpots get over $100 million, and I don’t buy for every drawing after that. That way, I’m only “allowed” to buy a few times a year. It’s fun, exciting, completely illogical, and worth every penny! Hey, maybe I’ll even win!
In our office, we had played the lottery as a group for years (and is the only way that I play). Our firm recently merged with another firm which also had a local office. The new group moved to our offices and there was a lot of suspicion and hostility on their part to begin with. We invited whoever wanted to join our weekly lotto to do so and started to pave the way to good will. Priceless!
If the odds of winning the lottery are next to impossible, then can’t I just daydream that I bought the ticket, and then daydream what I would do if I won, and still have the same little bit of entertainment? Then I would still have the money in my pocket.
I’ve always thought that winning the lottery, while it may be a dream come true, might also be somewhat of a curse. I imagine that you would also have to deal with a lot of crap, in the form of people trying to take advantage of you, pressures from family, learning who your true friends are, etc.
Actually some of those conversations are useful, because then can see what you value (living in same neighborhood, safety of children, being “anonymous” to walk around, do what you want) might have to give up if you have too much money, and also makes one appreciate the activities and relationships that you value that don’t require money at all! so it makes me come to the conclusion it would give me more financial security, but might not affect my overall happiness level.
How we spend our money will always be a hot button topic on PF blogs.
You like to go out for coffee? Make it at home, silly!
Like to eat out occasionally? Buy a crock pot and make fabulous meals that way!
Live in a high cost of living/rent area? Move to a cheaper location (ignore the fact you might live near your job, family, have a high walk score, good schools for your kids, etc).
Have or need a car? Get rid of it or buy the cheapest junker you can find. Remember oil changes every 5000 miles is a scam!
Go to a salon for a hair cut every month? Have your neighbor or your kid do it.
Need new clothes? Go to the dumpster in the back of the Goodwill.
Like to go camping? Safe money by pitching a tent in your backyard.
I can go on…
Yep, that.
Lotteries are wealth building for the organisations behind them; I have no problem with that. Lottery winners spend their money on goods and services so money is circulating – that’s healthy. I have nothing against the lottery though I seldom buy a ticket….you’ve got to be in it to win it!!
I only buy a ticket when the jackpot is over $250 million. That way I only buy one or two a year and it is really fun to talk about how you would spend that much money. But as far as odds, you are more likely to be struck by lightning a couple of times than win.
It’s interesting. The logic is essentially:
-yes, it appears, statistically, to have a negative impact on the poor.
-yes, there are people who abuse it in ways that are harmful to their lives.
-but I don’t abuse it, and I get some enjoyment out of it.
-and the same applies for most people who do it.
Do you realize you just made an argument for drug legalization? 😉
Same logic applies to alcohol.
And plenty of people make those arguments, so I’m not sure why that’s surprising.
But it doesn’t necessarily follow, because it’s quite easy to argue that the pleasure to harm ratio is different for drugs than the lottery (or for some drugs but not others) and that that justifies making them illegal.
Great article!! I enjoyed it (for free, lol)…and I play when the pot is over 100 million…escapism is truly fun every once in a while.
What right do we have to judge them? Well, if they’re making under $12k a year, they’re likely getting government assistance. So we’re all supporting their habit when they take their money and blow it on lottery tickets. The key thing here is IF THEY CAN AFFORD IT. I have no problem with people blowing their money however they want if they have it. But if they’re on government assistance for their food, housing, etc., and blowing 5% on lottery tickets, they’ve got issues. What happens the day the lottery is announced and they don’t win? Deep depression? After all, their hope is gone and the chunk of money they could have spent on food (or invested) is also gone. Get your hopes up and get them dashed; that doesn’t seem like a great mental exercise to me.
How dare they take “MY TAX DOLLARS” and then give it back to the government $1 at a time via lotto ticket purchases!?!
/sarcasm
Did y’all read about the woman in Michigan who won $1 million in the lottery last fall, yet continues to collect welfare? You’ve got to watch her interview: http://articles.latimes.com/2012/mar/07/nation/la-nn-na-lottery-winner-collects-welfare-20120307
She thinks she still deserves the welfare because she has “no income” and is “struggling.” After all, she says, her $1 million winning dropped to $700,000 by taking a lump sum, and then after taxes amounts to just over half a million. Unbelievable!
I heard about that a month ago and I also heard she had mental issues. Most people would NOT want to stay on the public rolls OR keep their job after winning the lottery.
Update: Apparently Michigan pulled her benefits about a month ago after outcry by Michigan residents. State law required her to report change in assets or income within 10 days, but she failed to do so.
I have not seen any reference to mental illness in any articles or blog posts about her, but that doesn’t mean it’s not possible. (Though her benefits were based on income, not mental health.)
I went to Vegas a few weeks ago for a work conference…and I didn’t spend a penny at any of the casinos (at least in the gambling sense). I’m not a gambler by any means..but I did buy a mega millions ticket….but that was only because I considered the $2 I spent “found money”. I had lent a coworker $2 several weeks back and then she showed up and paid me back…but I had fogotten about the $2 by then…so it was no loss for me to play for the “kitty” – considering I wasn’t missing the $2 before then anyways.
Don’t studies show that most lottery winners end up broke within 5 years? So even if they DO win, it doesn’t solve all their problems. Those reading this blog likely aren’t the kind who are spending 5% of their income on lottery tickets in hopes of getting “saved” from their poverty, so most of us readers can afford a lottery ticket or two if that’s how we choose to spend our money. We’re not the target market for the “lottery is evil” lectures.
I’ve not seen any such study. There are common news reports about lottery winners who go broke. I think those stories over hype the problem. But then news stories about rich people who don’t go broke are less interesting headlines. “Rich guy is still rich” News at 11!
If it’s okay to tax hope, it’s okay to have hope!
playing a lottery is a form of charity. I know i will not win, but i also know that someone will win. That someone more likely than not has little money. it is a good thing to enable someone to become rich. also, whoever wins, it is theyre money, no need to give it away, just because you won it.
On the other hand, if you did win, then you just accepted a bunch of money from people who couldn’t afford it!
You are right, we are all very quick to judge (myself included) what other people do. Great article!
I feel similarly about buying lottery tickets and such. Personally, we don’t get a tonne of enjoyment out of them so we very rarely buy them but if our work is doing a lottery pool (a couple times a year) we join in and every once in awhile my husband will pick up a scratch ticket if he happens to go into a variety store (though the last time we did this was probably a couple of years ago). It isn’t our thing- that doesn’t mean that it isn’t someone elses’ and if they can afford it why shouldn’t they get to have a bit of fun?
I do think it’s sad when I see people that can’t afford some fairly basic necessities wasting their money on the lottery. I guess that’s where the strong feelings that JD and Liz Weston and others have towards the lottery come from. I don’t think that has anything to do with the lottery though. In my experience, the same people that waste a couple dollars here on the lottery also waste a few dollars there on a new DVD and another $5 on lunch out and another $50 a month on the cell phone that they can’t live without etc. Or they have a gambling addiction. In both of these cases the issue reaches further than a simple little lottery.
I agree, it is worth the $1 to be able to dream about winning the big jackpot. Interesting point – the woman from Newport RI that recently won big is being investigated by the state because she was on public assistance when she bought the ticket. I guess you are not supposed to gable with public assistance money!!
I agree with everything Donna said.
The lottery is just a form of entertainment.
Most Americans gamble and I don’t see how the lottery is any worse than playing blackjack in Vegas or pumping money into slot machines at the local Indian casino. The odds are different but the house always wins in the end.
At least with the lottery the proceeds help the state rather than padding profits for a casino.
Some people don’t understand the odds of the lottery and thats unfortunate. But then most people think they can win at blackjack too..
Donna –
As always you made me laugh – and think. I loved your other post on this subject too:
“Here’s what I don’t get: Apps. Candy bars. Lunch out three times a week. Music downloads. Cell-phone upgrades. Manicures. Online gaming community memberships. Auto detailing. Spray tanning. And so on. I bet some people spend more on a single waxing than I spend on lottery tickets all year.”
As they say, priceless.
Thanks, Gerri…And have that triple-pump latte whatever-it-was if that’s what you want. You of course know that a reasonable budget includes room for treats.
Thank you, I love this article. I think people often forget that while your odds at winning the Jackpot is high the odds are greater you’ll win a small amount. I once asked my Mother why she buys lottery tickets occasionally instead of just saving the money and she says once every 1-2 years she wins 50$ or 100$ so she’s actually not losing money on the tickets. She’s never won over 250$ but if you’re breaking even and having fun I don’t see a problem with it.
The problem with that is that people are not breaking even. If people are breking even, where does all of the revenue from the lottery come from?
My husband’s childhood next door neighbor, at 80 years old, won the lottery worth $35 million. (Wealthy man prior to lottery, one of the nicest neighborhoods n California)
He died 2 years later and left everything to his kids….so….my advice? Get your parents to buy lottery tickets 🙂
Too funny! and it hit home.
My father who is low income and retired plays the Lotto WAY to much.. about $25 a week, while I pay for his phone, home insurance, and purchased the mobile home he lives in located in a nice Florida retirement village.
I have my fingers crossed twice he (we!) will hit it big one day. If not oh well, the money I donated to him is not holding me back financially and he enjoys playing.
NOte: he always worked low paying jobs, never had any major vices and NEVER and will NEVER except Welfare, food stamps etc. Even while making just above min. wage he did save, have an emg fund etc. They were just small and ran out before he did.
Any time I buy a lotto ticket I consider it a donation to charity…..not that I buy that many.
I prefer my odds at winning a door prize at events…..free….and the bag of rice I won was very useful thank you.
Door prizes, and “enter to win…” boxes in stores, and blog contests — I enter them all.
During the late 1980s I went through a period of winning stuffed animal after stuffed animal. All were oversized, some were huge and one was six feet tall. It got to be funny after a while.
I also won a bunch of other prizes, including a limo ride, a trip to Puerto Rico, dinner for six at a swanky restaurant, a Radio Flyer wagon, a set of “Nightmare on Elm Street” videos (there were only three at that point) and two turkeys.
More recently I’ve won a couple of Amazon GCs and two books on PF blog giveaways. These tend to become prizes on my own personal site (I give something away every Friday). Kind of like the “lone fruitcake” theory: That there’s really only one in the world and it just keeps getting passed on to new people as a “gift.”
Your post has created lots of thoughts and reactions.
So…….. here are my thoughts and reactions.
The USA remains a free country. If buying a lottery ticket isn’t illegal, or hurtful, you can do it.
People know that the chances of winning the lottery are remote.
We can’t prevent a person’s hopes or dreams. For some, this is all they have.
Rather than standing on a soapbox, we can encourage people to look for other venues for improvement in their situation.
I think Nicole posted here a few months ago about some study that says that for some people lottery tickets are a way to retain part of their money (small prizes have higher odds) rather than losing it all at the hands of leeches and moochers. True story. See if she posts.
—
EDIT: actually she posted above, but see if she posts about this subject.
Great article, Donna–I really like your sense of humor! I never let the naysayers get to me, I play the lottery a few times a year, and I enjoy it for what it is– a chance to dream about becoming an instant millionaire! I don’t like to play when the jackpot is super-big, simply because winning that much money would take a lot of the joy from my life. I like meeting and mingling with everyday people just like me, and I could never enjoy the notoriety of being mega-rich. But I see absolutely nothing wrong with playing the lottery and I think it’s up to the individual person how much they play. I find it’s usually someone who doesn’t understand why the poor and working class buy so many tickets and are judging them for it, who have the biggest problem with it. They do not understand. Many people have worked for years at low paying jobs and every time they save a few dollars, it gets spent on car repairs, hospital bills, medication, or other necessities. They are never able to get ahead and feel frustrated and discouraged with their lives. When a jackpot comes up, they are hoping, just hoping,that they’ll win and become a success–have a great house, a car that doesn’t break down every week and enough money for them and everybody they care about. The lottery represents hope for them. And lottery officials make millions off that hope. At the most I spend maybe $20 a yr on tickets, and that works for me. However, I wouldn’t at any time make fun of someone who plays more, it’s heartbreaking, but I understand.
“30% of people without high-school degrees consider the lottery a wealth-building strategy.” I wonder where this concept comes from?
Articles like this is the reason I can no longer take this website seriously.
Alot of words gave their lives in the attempt to communicate the following concept:
Lottery tickets are not an investment. Treating them as such is a waste of money.
Lottery tickets as entertainment are okay as long as the other areas of your financial life are taken care of and purchased in moderation.
I don’t know if that applies, but I used to buy lottery as an unemployment insurance. Let me explain:
I work in a small company that employs a small number of people. They used to play the Euromillions every week, each of us put €1. I knew the probabilities of winning were scarce, but in case the amount per person (around half € million per person) would have made most of them leave their jobs and the company probably will go bankrupt and the remaining employees will loose their job.
So I realized the best way to insurance myself against this issue was to play too. Loosing your job isn’t bad, but doing it with a €500.000 compensation is not as much bad! So to me the weekly euro worth the insurance.
OK, you can’t look at the lottery like some type of investment or look for a return on your money. Is is a good move financially? No! But it is fun to dream, and as long as you don’t make it part of your financial plan, it is mostly harmless fun. And if you ever happen to win….
Here’s my spin on buying lottery tickets. I buy the state Lotto tickets a couple of time a month. I have an infintismal chance of winning, but I can’t win unless I buy. And someone is going to win. But I buy not only for that tiny chance, but because it’s kind of a payback into a fund that REALLY benefited my child. When she got her BS in ’02, the Bright Futures Scholarship (Lottery funded) had given her about $16,000 in free tuition at UF and a modest book stipend each semester. My $40-50 spent on tickets each year goes to help someone else’s kid get through college. And I DO get a chance at winning the “big one!”
Hey, if you go for the entertaiment value, and look at it that way – why not? I don’t buy lottery tickets, but if people find it fun and don’t actually expect to win…hey, why not?
Thank you for this, today I learned that I’m not crazy! I buy maybe two lottery tickets a year, and I have always felt a little guilty about dreaming (so specifically, like you!) about what I would do if I won, because of course I know the odds are terrible. From now on, I’m going to buy my two lottery tickets and just enjoy the dreaming =)
The people who really need to NOT buy lottery tickets, ever, are not reading this blog anyway. To me if you’ve gotten to the point where you actually think it’s a good idea to pay attention to your earnings vs. spending, maybe you also know when it’s okay vs. not okay to spend money on a lottery ticket.
I was raised to believe the lottery is gambling and I’m not even sure my church would want my lottery-won donation if they knew where it was coming from. But I’m fine with spending $5/year just for the fun of it. I don’t consider it a waste. And people can have their opinions as to what the lottery really is. It’s a free country.
I’ve noticed a lot of comments relate winning the lotto with dreaming. I am the complete opposite, I would not want to win the lotto because I feel that is money that is unearned. The sense of accomplishment would diminish if I were given millions instead of earning it by work and saving. That process allows me to know how to handle money.
A lot of people say they would like to give it a shot (in regards to winning millions) to see if they could handle it. But that’s just it, most people are not prepared for overnight millions.
It has been said, that money magnifies who you truly are. That could be good or bad.
First off – excellent article.
I love the lottery if only for its ability to make you desire.
A friend of mine hates the lottery and would put his weekly lottery spend in a jar and then check every week to make sure he hadn’t won – rich in the knowledge that he was saving.
3 years in to his savings plan and weekly celebration at not winning the lottery…his wife serves divorce papers on him for his miserly ways and tells him that she had been secretly playing the lottery and had just won £2.5 million
Foe 3 years she had put up with his miserly lottery rant until she won…He’d saved £150 and she had won £2.5 million.
As for anyone pontificating about poor people playing the lottery – they should take a look at fat people eating cakes or ill people smoking.
Do what makes you happy
Cathi
Excellent article about keeping some perspective. My mother-in-law’s ex-husband had a serious gambling addiction; he spent a quarter of their (already small) monthly income on lottery tickets and landed them in ruin. But, like the OP says, if you’ve already got your financial house reasonably in order, everybody’s entitled to whatever occasional small splurge makes them happy, without having other people jump all over it. Personally, I have no understanding why people waste time AND money on World of Warcraft, but it’s a choice they are entitled to make.
The problem is more then just playing… but actually finding out you won. This is why it’s a tax on stupid. There is a punchline to winning the lotto.
With large lotto jackpots (like the recent Mega-Millions jackpot), the winner will be found out, regardless of whether one has the option to exercise anonymity. The fact is, no one deposits large sums of money in a bank without being noticed.
The problem is “Found-Money” vs “Earned-Money”. With “Found-Money”, everyone including your old best friend from 1st grade somehow thinks their entitled to some of your money as you didn’t earn it. Same with that Swiss Bank you think you’re going to deposit it in, they know you didn’t earn it, and at some point, the mysterious phone calls, strangers, and the unexplainable soon follow.
The people that want to extract money from you take the form of Financial Planners, Lawyers, Investment Bankers, Advisors, Security, Psychologists, “Old” Friends, Charities, Orphan Disease Foundations, Kids with Cancer, The Homeless, The Psycho Who Knows Your Identity, and don’t forget your “New” friends who know you didn’t earn it.
Don’t forget “After-Lotto” (look-em up), apparently they are an organization that is suppose to help lotto winners with adjusting to their new found money… sure they do.
If one thinks that by winning the lotto their troubles will be over, be assured you that if you do “win”, you will never sleep well again.
So who do you trust? Those you know or those you don’t?
There is no escape …and thats the punchline of winning the lotto.
“Shirley Jackson”? Cute.
I didn’t read all the comments, so I don’t know if anyone has a take like mine.
My husband and I never play the lottery, but because of all the hype we decided to buy a few tickets for the Mega Millions recently.
Anyway, I thought about it and, in a way it’s kind of like life (or any) insurance. With insurance, you’re essentially betting against yourself, so with the lottery, you’re betting for yourself.
Perhaps my idea is a bit oversimplified, but since the rest of our financial house is in order, we have decided to buy a few lottery tickets from time to time. Ones with better odds than the MM of course 🙂
I pay for one lottery ticket per trip to the gas station, which for many people would amount to quite a bit of cash but for me means a ticket maybe every third week or month because I walk and use public transportation.
I consider it a ‘fun’ expense, but I also buy state lottery, which in fact cut my own educational expenses down 25%. In other words, the lottery scholarship I received saved me $15k, and at the rate I’m buying lotto tickets, I’m not going to be paying that back. That money comes from a PLURALISM of payers, not individual donations. Certainly someone could tell me to just donate $15k to education or start my own scholarship, but I don’t have that kind of money sitting around for philanthropy and participating in a more regular mini-donation over a long period of time with a lot of other people probably has a wider effect. With lottery scholarships and just paying as much tuition as I could with part-time jobs et al, I only ended up with $7k in student debt which is less than a quarter of the national average and I paid off within a year. So I think that indicates that the state lottery scholarship program is a good investment.
Furthermore, as concerns the lottery’s overhead, one of my friends is a graphic designer for the state scratcher tickets, so I like to think that I’m helping fund his career.
Approaching the lottery in that admittedly idiosyncratic way makes me feel like if I lose, I win because I’m helping my local community secondary education and peer’s job, and if I win, I get money. Total expenses per year: ~$20. If that’s an idiot tax, bitch please, that’s a goddamned trip to a movie theatre for one.
–DB
Joe Sixpack’s $52/year is way low in my experience. I see most “poor” folks blow that and more sitting around in a day of “Lotto” and Keno and scratch-off’s. It is immoral because it is a source of false hope sent by the govt for them – a remote and entertaining chance of grand riches granted by their overlords, while their welfare checks (that you and I pay for) is the govt overlord’s reliable promise of a mediocre life. I don’t buy them because I know it’s a lie that eats away at my drive and energy to earn real money. It’s just “wishbone” builder.
You see “most ‘poor folks’.” Do you see ALL of them?
I don’t think Doug’s comment was to generalize all ‘poor folks’, but to put the blame on the government for running a scheme that disproportionally hurts the people with the lowest income. If you can afford it and you enjoy playing the lottery more power to you, but if you can’t and then have to rely on public assistance or don’t give your family the best chance to develop then it is a drain on society. I kind of expect some companies to prey on the poor and uneducated, but it is a shame when it is our state governments that are doing it.
spending a dollar a week on the lottery is not dumb at all. Like he said there are a thousand other things that people spend their money on but we never ridicule them for it.
Re the words on playing the lottery. I am always amused about the amounts people claim they would give to charity. As long as you pay all your civilly mandated income taxes, you do not have to give anything to charity. We are here to help, if we can, but giving of your time is perhaps the best gift of all.
What makes you think that it’s a “claim”? I really would increase the amounts I give to charity.
And sure, the food bank might be able to use my help sorting canned goods. But I happen to think that a $50,000 check would do an awful lot of good, too.
I have never understood the reason why people want to be richer than a lot of other people but then shout out how much money they would or will give away. It is interesting that there are many people out there who simply want to have a lot of money to give away but do NOT want to have a lot of money for their own personnal use. I guess I am different. I retired many years ago and though when I was a child, did not live in a family with a lot of money, as I grew into my teens my father’s business began to prosper.
In short I have lived through the whole cycle.
Though not the part were the money is lost. I have been modestly poor and through a lot of,luck and some hard work, lived a very comfortable existence. But the more money that I have had access to the happier my life has become. I want the money for my family!! There is nothing wrong with trying honestly to get your share then keeping your share!! Think about yourself, that is not a crime!!!
I *am* thinking of myself, which is why I mentioned a lawyer and an investment specialist. But once my financial future were reasonably secure and I’d done the other things I mentioned, yes, I would give a lot of the money away. Need exists and I would like to help the causes I currently support, but in a much bigger way.
I’ve been broke and I’ve been comfortable. Comfortable is definitely better.
But with a lottery win there would be enough to keep AND to share.
Wow. I’ve been reading this blog religiously since its inception and have noticed that the quality of the articles has dropped significantly.
What does this article have to do with getting rich slowly. Nothing. This article is actually teaching the *exact opposite* that J.D. would have taught 5 years ago.
Shame. I may be unsubscribing soon.
Well. I guess if you keep playing and don’t win….that’s getting rich slowly enough – LOL!